Internet auctioneer eBay Inc may sell its China operation because of strong competition from Chinese rivals.

Tom Group may take over eBay Eachnet and its online payment service, PayPal's China division.

It was unlikely that eBay would withdraw from the China market, but it was possible that eBay would retain some stake in its China division while seeking a Chinese partner.

Hong Kong-listed Tom Group would announce its takeover of eBay's China division and its PayPal service within a few days. An agreement between the two companies had already been signed.

EBay bought one-third of Eachnet's stake for 30 million U.S. dollars in 2002. It spent another 150 million dollars on the remaining shares of Eachnet in 2003.

But shortly after that, eBay Eachnet's share in the consumer-to-consumer market went down under competition from taobao.com.

Taobao.com attracted customers from eBay Eachnet with its free online trading platform, while Eachnet collected a commission of up to 8 yuan (1 dollar) for each item sold on its site.

By last year, Taobao accounted for 67.3 percent of the C2C market in Shanghai, Beijing and Guangzhou, much higher than eBay's 29.1 percent.

It is possible that eBay will reduce its investment in China because of its poor performance in the past three years over pressure from its shareholders.

But China is such a big market that no big multinationals can afford to lose, so it's unlikely that it will completely withdraw from China.

Source:佚名