eBay and Baidu sign a cross-promotional deal

I think we started talking about eBay, Inc.'s (NASDAQ:EBAY) endeavors in China months ago. Rumors kept surfacing every few months about eBay either getting out of China or making a deal with a local player. Just last week there were reports that Tom.com (NASDAQ:TOMO) and eBay EachNet were close to signing an agreement.

To hear, then, that eBay EachNet and Baidu, Inc. (NASDAQ:BIDU) agreed on a partnership isn't surprising and what's more, it makes perfect sense.

With over 60% of the Chinese market, Baidu is China's largest portal and search engine. With this in mind, the cross-promotional partnership could greatly benefit EachNet. Baidu will promote, PayPal Beibao, PayPal's Chinese service, as a preferred payment method while eBay EachNet will use Baidu exclusively for its search advertising. The companies will be testing the search as early as the first quarter; implementing by the second. A special toolbar, co-branded, will also be developed by the two companies.

Despite the fact that on the face of it the deal seems like it would benefit EachNet more than it would Baidu, BIDU shares are up 2.8% while EBAY shares are flat (by 11:30 a.m.). All in all, I'd say this is a positive move for eBay as the company's starting to show a strategy for this market.

Finally, if you recall, rumors of Google, Inc. (NASDAQ:GOOG) or Yahoo!, Inc. (NASDAQ:YHOO) acquiring Baidu have also been floating around. If there is any truth to these rumors, this would be weird as Yahoo! holds a stake in eBay's competitor in China, Alibaba's Taobao.