The joint-venture initiative, which will see Tom Online hold a 51 per cent majority stake for a cost of US$20 million, with eBay subsidiary eBay EachNet taking the remaining 49 per cent with an input of $40 million, will create a new online auction site to replace eBay's main China portal.
The move will give eBay access to Tom Online's user base of 75 million along with its local market expertise.
After entering China in 2002, eBay has struggled to gain a foothold on the mainland, particularly against local incumbent Alibaba.com which runs the TaoBao auction site, and in September 2006, eBay EachNet's CEO Martin Wu stepped down, amidst speculation the auction site was considering pulling out of China altogether.
“Ebay has been struggling a lot because it hasn? understood how the buying mentality works, that's one of the primary reasons,” said a source.
“What Tom brings in is a lot of content areas that eBay will be able to leverage, but it's also a strong market share acquisition from a user point of view. The JV will help considerably because it buys audience and cross promotion opportunities.”
Although unavailable for comment at Media's presstime, eBay China chiefs have publically reconfirmed the brands commitment to China.
EBay EachNet chief executive officer Jeff Liao will continue to handle the company's separate operations in China, which include expanding its China Development Centre for worldwide product development.
The new development coincides with an eBay Hong Kong online campaign featuring pop star Jacky Cheung.
Ebay, which is developing the online auction component of Cheung's 2007 world tour website in collaboration with Fun Multimedia and iThink, is setting up a custom store which will include a premium seats auction page and more than 50,000 merchandise items for sale.
The site will go live on January 30, before Cheung’s world tour gets underway in Las Vegas, USA, in February.
“Our relationship with Mr Cheung allows eBay Hong Kong to connect its own global community to his music, while bringing his community of fans the joy of online shopping at eBay,” he added.
