More Trouble for eBay in China

Rob Hof

The departure last week of Martin Wu, head of eBay Eachnet, eBay's site in China, has some news outlets there reporting that the online marketplace is exiting the market entirely and selling out to Hong Kong billionaire Li Ka-shing's Tom Group. Jeff Liao, head of the China operation of eBay's payment unit, PayPal, will take over, heading both operations. eBay said it expects to gain efficiencies from the move, which is of course code for potential layoffs.

eBay won't comment on the "rumors," even to deny them. But given that eBay invested upwards of $100 million in China last year to fight fast-rising Alibaba's Taobao.com, a complete exit would be surprising. Indeed, Citigroup analyst Mark Mahaney notes that eBay may need to do an alliance with a local company to avoid losing more ground. Last year, Yahoo! paid $1 billion for a 40% stake in Alibaba.

Update: Now Pacific Epoch reports that eBay may be talking with Chinese community site Tencent--either to buy Tencent or to sell eBay's China operations to it. Pretty wide range of possibilities, no?

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