Yesterday, I waited until I had confirmation of the rumors that eBay China's CEO, Martin Wu, was indeed resigning.
Not a day later, and new reports are starting to surface about eBay China. This one claims that Tom.com, a Hong-Kong company, will soon "announce its takeover of eBay's China division and its PayPal service." That's according to a Chinese newspaper, the 21st Century Business Herald. The Tom Group is already distributing Skype in China.
eBay has been facing fierce competition in China from Alibaba's Taobao. With Taobao offering free listings while eBay Eachnet charges a fee, eBay China was losing market share fast. Now, with new Chinese regulation limiting foreign investment in online payment systems, it seems that eBay is quickly trying to improve its position in China.
A commenter in last night's post about China, claims to be close to the situation. He reassured me that my concern with the new CEO of eBay China is unwarranted since he was put there simply to facilitate and "manage the integration/transition of eBay China to its new ownership, which will either be Tencent or Tom.com." If that's true, a numbers guy for the job does make more sense.
Does this mean a withdrawal of eBay from China altogether? I find it hard to believe. As Meg Whitman, eBay's CEO, said before, the Chinese market is the one with the most growth potential. Why would eBay withdraw from that market?
Rumors are rumors and should be taken with a grain of salt. Perhaps the negotiations aren't for a takeover but more for a partnership -- one that would be similar to the Yahoo! Inc. (NASDAQ: YHOO), Alibaba relationship. That would make more sense and would definitely help eBay get a better hold of the immense Chinese market.
Last I checked, eBay shares were up more than 4%, trading at $27.30. It does seem then that there is some truth to the rumors after all. The question is, what truth.
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Reader Comments (Page 1 of 1)
9-26-2006 @ 10:49AM
Ann lambert said...
The answer is: Deep pockets always win.
9-26-2006 @ 11:12AM
Alex said...
"Deep pockets always win"
Too true. Especially now Jack Ma is wearing the trousers.
9-26-2006 @ 11:24AM
Ann lambert said...
Sure, Jack Ma is wearing a SCHOOL boy trouser.
He is all talk like a school boy doing to the prom
Where is his busniess savy, have you listen to his
speaches at the analysts meeting? Alex.
9-26-2006 @ 11:44AM
Alex said...
Paragraph 3, where it says "eBay China was losing market share fast."
What's wrong with his speeches? I'm sure we can make allowances for those who haven't quite grasped the English language yet. Can't we?
9-26-2006 @ 1:19PM
Sarah Trent said...
As the saturation of Chinese listings on eBay UK is largely limited to Chinese sellers who only list on the UK site, it will not resolve the attendant problems of fake antiques, jewellery (and other assorted leading brand products) and the exorbitant mailing costs they charge gullible buyers. Not every buyer notices that their bought item costs 100GBP to mail from Hong Kong and gets caught out with this all too common scam.
9-26-2006 @ 1:58PM
Randall said...
Melly, the Ebay China news just keeps getting more interesting. Ina Steiner of Auctionbytes has just posted an interview with an Alibaba spokesman.
http://blog.auctionbytes.com/cgi-bin/blog/blog.pl?/pl/2006/9/1159291183.html
It appears the competition is trying to get a little boost from the speculation.
9-27-2006 @ 9:47AM
Melly said...
Thanks for the update and link, Randall.
9-26-2006 @ 9:15PM
Helen said...
And at the first sign of eBay getting out of the loss making and image/integrity damaging Chinese situation the stock value goes up significantly.
Now I don't recall hearing our resident 'eBay fan' Ann Lambert agreeing with this action when highlighted by eBay sellers? In fact nothing is a good idea until eBay have done it in Anns world. But at least it seems the money in the markets have taken a more pragmatic view. Maybe these sellers have brains after all Ann?
So now maybe Meg Whitman will realise the markets like profit making success and not expensive failure? Will Meg, once she's cut their losses in China, look to the savings as a way to limit and reverse the damage that eBay have done in her own back yard now? Go on Meg! Do the right thing.
Time will tell.
9-27-2006 @ 9:36PM
Mr Wave Theory said...
Rumor has it that Tom Online (NASDAQ TOMO) will be taking over eBay Inc 's China business which include eBay China and Paypal China. Tom.com is the distributor of Skype, eBay's online telephone service in China. I think there are two drivers behind this move:
http://mrwavetheory.blogspot.com/2006/09/tomcom-to-acquire-ebay-china-and.html