Aug. 19 (Bloomberg) -- Amazon.com Inc. agreed to buy Joyo.com, China's largest online retailer of books, music and videos, for $75 million, to gain access to the world's second- biggest Internet market.

Amazon.com, the world's largest Internet retailer, will pay $72 million in cash and assume employee stock options to buy the company. Joyo.com, headquartered in Beijing, operates two Web sites in cooperation with Chinese subsidiaries and affiliates, Seattle-based Amazon said.

The purchase will give Amazon.com its seventh international Web site after competitors Yahoo! Inc. and EBay Inc. bought sites and made investments in China, which has more than 80 million Internet users. An estimated 27.7 million people in China make purchases through the Internet, according to market researcher International Data Corp.

``It looks like a way for Amazon, for a relatively cheap price, to get exposure to one of the best growth areas geographically in the next decade,'' said Norm Conley, who helps manage $930 million at St. Louis-based J.A. Glynn & Co., including 127,000 Amazon.com shares. ``They're getting a bigger footprint internationally and I think that's the right thing to do.''

International sales are growing faster than Amazon.com's domestic operations. During the second quarter, sales at sites outside the U.S. rose 50 percent to $595 million. They climbed 13 percent to $792 million in the U.S.

The company, which has sites in the U.S., Canada, France, Germany, U.K and Japan, said it expects international sales to surpass U.S. revenue in the future.

Joyo.com

Shares of Amazon fell 34 cents to $39.02 at 10:17 a.m. in Nasdaq composite trading. Its shares are down 25 percent this year.

Joyo.com operates three fulfillment centers in Beijing, Shanghai and Guangzhou that feed 30 delivery centers, Amazon.com spokeswoman Patty Smith said.

She declined to detail four-year-old Joyo's revenue or number of employees, saying the transaction is expected to close in the third quarter 2004.

``I am confident that Amazon.com's expertise in global e- commerce, in combination with Joyo's entrepreneurial management team and employees, will bring the development of e-commerce and online customer experience in China to a new level," said Lei Jun, founder and chairman of Joyo.com and president of Kingsoft Holdings Limited, the largest shareholder of Joyo.com.

EBay

Amazon.com made an unsuccessful offer to take over Dangdang.com, a Joyo rival, in July, Beijing Youth Daily said, citing unidentified officials at Dangdang.

Talks failed after four months because Dangdang didn't want to lose control of the company, the report said. Dangdang offered a minority stake to Amazon, which proposed to buy 70 percent to 90 percent of the company for as much as $1 billion, it said.

Yahoo, the owner of the most-used group of web sites, added to its China operations in November when it agreed to buy 3721 Network Software Co. for $120 million. This year formed a joint venture with Shanghai-based Sina Corp., China's largest portal, to operate an online auction business.

EBay, the largest Internet auctioneer, has invested more than $180 million in China, purchasing Eachnet, an auction site, as well as opening its first research and development center outside of the U.S.

To contact the reporter on this story: Greg Wiles in San Francisco grwiles@bloomberg.net

Last Updated: August 19, 2004 10:26 EDT