eBay to float joint venture in China; give controlling stake to partner

Mumbai: eBay Inc., the world's biggest online auctioneer, plans to operate its China site as a joint venture with a local partner. Under the plan, eBay will put its China business, which it purchased for $180 million, into a venture with Beijing-based Tom Online, sources familiar with the matter said.

eBay will cede control to Tom Online, an internet and wireless media specialist, giving it a controlling 51 per cent of the venture, with eBay holding the remaining 49 per cent, sources said.

eBay is trying to hold on in a tough market by strengthening its position in the region rather than make an exit, as it did in Japan. Analysts also say eBay is reluctant to retreat from China as it did from Japan in 2002.

Meanwhile, eBay's PayPal, the online payment unit, will announce a parallel deal to form a joint venture with a Chinese electronic payment specialist, local media reports said.

Under the deal, PayPal will give $105 million for a 33 per cent stake in the venture with UMPay, which is itself a joint venture between China Mobile, China's top mobile carrier, and China UnionPay, operator of an electronic financial system linking most major Chinese banks.

The eBay China deal is the latest example of a Western media firm ceding control of its China operation in the face of a tough market.