Aug. 19 (Bloomberg) -- Amazon.com Inc. agreed to pay $75 million for Joyo.com, China's largest online retailer of books, music and videos, 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. Closely held Joyo.com, headquartered in Beijing, operates two Web sites in cooperation with Chinese subsidiaries and affiliates, Seattle-based Amazon said.

The purchase, which will give Amazon.com its sixth international Web site, follows investments in China by competitors Yahoo! Inc. and EBay Inc. Amazon.com is trying to grab a share of the estimated 27.7 million online shoppers in China as the company's international revenue growth outpaces that of the U.S.

``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.''

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

Amazon.com has used acquisitions to enter international markets. In April 1998 it bought Bookpages Ltd. in the U.K. and Telebook Inc., a German online book retailer, to help its entry into those markets.

Shares of Amazon fell 12 cents to $39.24 at 10:55 a.m. in Nasdaq stock market 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.

EBay

Internet retailers will sell $8.59 billion worth of merchandise in China this year, according to International Data Corp. That's less than one-tenth of sales in the U.S., the world's largest market.

``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.

There were 87 million Internet users in China in June, 28 percent more than a year earlier, according to the China Internet Network Information Center, a government-sponsored information center.

Amazon had its first full-year profit last year after piling up accumulated losses of $3.05 billion during its first eight years of operation. The online retailer, which was a symbol of money-losing dot.com companies, ended the second quarter with $1.15 billion of cash and marketable securities.

Yahoo

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.

Amazon.com wasn't advised by an investment bank in the transaction, Smith said.

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

Last Updated: August 19, 2004 13:04 EDT