eBay Inc.’s expansion dream seems to be shattered as it contemplating to close it operations in China. And the San Jose based auction site is forging a deal with a Chinese company in the face of tough market where it was loosing its users constantly to its rivals. According to reports, eBay is teaming up with Tom Online, a Beijing based wireless phone and online portal company.
Under the arrangements of the deal Tom will invest around $20 million and will keep majority of shares to the tune of 51 percent stake in the joint venture, which will manage and operate eBay’s new Chinese auction endeavor. On the other hand, eBay will invest around $40 million and will keep rest of the shares amounting to 49 percent.
The clear shift in strategy is brought into action amidst the widely spread speculation that the company will withdraw from the Chinese market due to its deteriorating business in China. The company was on the top of the auction sites list however, in recent time the company was pushed to second place by miles by Taobao.com operated by Yahoo’s partner Alibaba.com.
The companies, Tom Online and eBay have preferred to remain tight lipped about the newly forged alliance by declining to comment on this. However, the sources have said that the decision was strategic one aimed at strengthening its position in China and certainly not an exit route.
