eBay Inc. (NASDAQ:EBAY) is supposed to announce a deal with Tom Online Inc. (NASDAQ:TOMO) today. It's been long time coming. Anyone who has been following eBay closely the past year, has also been aware of the occasional rumor surfacing regarding a potential deal involving eBay China with the usual suspect being Tom Online.

Quite frankly, I'm surprised by the Wall Street Journal title: EBay Steps Back From Asia, Will Shutter China Site, or by the New York Times title: EBay Is Expected to Close Its Auction Site in China. I guess I've been expecting exactly such a deal so I don't see it as a retreat from the Chinese market, but as a change in strategy. And when a strategy isn't working, as was the case for eBay Eachnet in China, a change is welcome.

According to sources, no job cuts are planned, furthering the idea that this move is a strategic shift aimed at strengthening operations in China, not an exit strategy. This isn't another Japan where eBay bowed out to Yahoo! Japan.

True, eBay will close its primary Chinese site and pay about $40 million for a 49% stake in a new venture with Tom Online, a Beijing-based Internet company, ceding control of its China operations. Tom Online will then operate the site and maintain a 51% stake in the new site. But investors have to consider that eBay wasn't doing well in China, a market touted by Meg Whitman, eBay's CEO, as a major part of eBay's future.

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.

It seems that only yesterday we talked about these rumors. Actually, it was at the end of September.

Once again the rumors come from a source I'm not sure about, China TechNews.com (I guess that's why they're called rumors). Yet, when this same source reported about the resignation of eBay, Inc. (NASDAQ:EBAY) China, or eBay Eachnet's CEO; a report that ended up being correct.

Now the Internet magazine is reporting (citing Chinese media sources) that Tom Online (NASDAQ:TOMO) has signed an agreement with eBay Eachnet to acquire it with a formal announcement coming soon.

Apparently, someone named Zhou Kaixuan, who is also a shareholder in eBay's Skype (which sounds a little odd to me), was the mediator in the negotiations. That's a pretty specific detail, I'd say.

eBay is denying the rumor.

Well, this doesn't sit well with me at all:

• First of all, Meg Whitman, eBay's CEO just recently said in the Q3 earnings call that eBay is committed to China.
• Second, after leaving Japan and having increasingly strong competition from Gmarket in Korea, selling eBay Eachnet would mean eBay is not only leaving China, but the whole of Asia pretty much (well, not India).
• Third, I also mentioned here the possible difficulties for Skype in China and PayPal already has a problem there with regulations as it cannot be fully owned by foreigners. What does that leave then?

I still hope that the rumors are wrong and that there is a strategy hidden in those sale rumors.

Adding to earlier rumored possibilities I outlined this morning about eBay China's fate, AuctionBytes now adds another.

Up to now we had the two possibilities of eBay China being sold to either Tencent or Tom.com. AuctionBytes quotes Pacific Epoch, adding a third possibility of eBay actually negotiating the acquisition of Tencent, rather than the other way around.

This makes a little more sense to me as I don't see eBay Inc. (NASDAQ: EBAY) just giving up on the whole Chinese market and withdrawing altogether from it by selling its operations there.

Looking at today's share price, eBay shares are up over 3.5%. The increase in share price could be attributed to a Goldman Sachs bullish note on eBay. Goldman lowered its eBay target price from $54 to $35, but reiterated its "Buy" rating on eBay at the same time. While Goldman is bullish, others predict eBay's Q3 to be "less-than-stellar."

Could eBay shares be up 3.5% solely on a Goldman note, or is there anything behind the rumors? And if so, what?

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.