Tom.com to buyout eBay China, PayPal
Tom.com is going to announce its takeover of eBay's China division and its PayPal service, the 21st Century Business Herald reported today, citing a well-informed source.
Tom Group is the distributor of Skype, eBay's online telephone service in China.
According to the previous agreement between eBay and Eachnet, eBay will sell its shares to the company before withdrawing from the Chinese market.
In March 2003, eBay bought one third of Eachnet's stake by paying US$30 million, while Eachnet accounted for over 90 percent of China's C2C market. It spent another US$150 million to buy the remaining shares of Eachnet in 2003.
However, in April, Jack Ma, CEO of Alibaba.com—China's largest B2B Website, established Taobao.com and later lured away many of eBay China's customers by offering a free online trading platform, while Eachnet collected a commission of up to 8 yuan (US$1) for each item sold on its Website.
By 2005, Taobao accounted for 67.3 percent of the C2C market in Shanghai, Beijing and Guangzhou, much higher than eBay's 29.1 percent, according to the China Internet Network Information Center.
In another development, the People's Bank of China is drafting a regulation which stipulates that foreign investment faces a limit for its shares in an enterprise operating online payment systems. eBay is the only owner of its C2C Website in China and the Paypal service. It was looking for Chinese partners in its startup, but ended up selling off its Chinese branch.
By the end of June, Tom Group had 1.7 billion Hong Kong dollars (US$218 million) in cash and a credit line of 2.1 billion Hong Kong dollars.
The well-informed source also said eBay China appointed Liao Guangyu as its new CEO only to carry out the takeover. Liao replaced Martin Wu, who became eBay's CEO last September.
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