Possible partnership hints at eBay making moves in China

EBay and Chinese e-commerce retailer Xiu.com plan to make a joint announcement later this month

A Chinese e-commerce vendor said on Thursday the company is entering into a partnership with eBay, in a sign that the U.S. Internet firm may be preparing to make big moves in China's online market once again.

Chinese online retailer Xiu.com plans to provide further details on the partnership on Nov. 12, according to a company spokeswoman. EBay's public relations agency in China declined to state whether a partnership was taking place, but confirmed a joint announcement would be made with Xiu.com.

A decade ago, eBay had entered the Chinese e-commerce market only to be met with stiff competition from Chinese Internet firm Alibaba Group, whose Taobao sites now dominate the country's online retail market. EBay then replaced its Chinese auction site in 2006 with a minority-owned joint venture in a move many saw as the company exiting the market.

EBay continues to run a site in China, but it's geared toward helping vendors in the country sell abroad by using the company's services. The company's PayPal subsidiary, however, said earlier this year it plans to enter China's online payment market.

For eBay, China represents a vast market, with 538 million Internet users, and growth in the country's e-commerce sector remains strong. Last year, total trade volume in China's business-to-consumer market reached US$38.1 billion, according to Beijing-based research firm Analysys International.

Competition in China's online retail space, however, also remains strong. Aibaba's Taobao Mall and Taobao Marketplace had close to an 80 percent share over the country's e-commerce market in 2011, while many other rivals had only small pieces of the market, said Mark Natkin, managing director for Marbridge Consulting.

As for Xiu.com, the site is known as a luxury clothing retailer in China. But while the company is one of the country's top 10 e-commerce vendors, third-party research also showed it having only an 0.8 percent market share in 2011, Natkin said.

While its unclear what eBay has in store with Xiu.com, Natkin pointed to reports that eBay had named a new CEO earlier this year for its China operations and that the company was building up its operations in the country.

Still, an expansion into China's e-commerce market would be coming during the "late stage in the game" as Alibaba Group's e-commerce sites lead the market, Natkin added.

"I feel if eBay is looking to come back into the China market, it must have already lost all the people who tried to bring it in the first time, the people who remember how painful it was," he said.

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Michael Kan

IDG News Service
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