China auction site Taobao sees sales doubling in '09

Taobao, whose parent company Alibaba Group, also controls Alibaba.com, has over 145 million registered users and is widely considered China's eBay Inc Ebay.O. Users can buy goods ranging from face soap to furniture on the bright orange and white auction page.

The firm's 2009 sales are expected to more than double from 300 to 400 million yuan ($44-59 million) last year as more rural users log onto the site to sell their products and commission from its online mall business grows, Taobao chief executive Jonathan Lu said.

China's domestic consumer spending has remained resilient during the global economic downturn as Beijing's massive stimulus spending has helped to sustain income growth.

"The unique thing about China is that you can have one wealthy person amongst 100 people, and the one person is the buyer and the others are selling him things to fulfil his needs," said Lu.

Sellers on the auction site from developing cities such as Chengdu are spurring Taobao's growth, compared with the past few years when the main sellers came from big cities such as Shanghai, Beijing, Shenzhen and Guangdong, Lu said.

"What we are seeing is that these sellers from the developing areas are learning from the IKEA model and putting their do-it-yourself household items on Taobao and selling to city folk at city prices," he said.

Taobao said users from developed cities and less developed cities are currently evenly split at 50 percent.

Taoboa's transaction volume rose 97 percent to 80.9 billion yuan ($11.8 billion) in the first half of the year.

Lu said Taobao will break even this year and its revenue was split at 70 percent from advertisements and 30 percent from auction commissions.

He said another growth area was Taobao Mall, the corporate retail section of the auction site where goods from Dell, Lenovo and Proctor & Gamble are sold.

Taobao has a 78 percent share of China's domestic online consumer market, the firm has said, quoting statistics from iResearch.

Lu told Reuters the main focus for the firm would be the Chinese market and that there were no immediate plans to list.

($1=6.827 Yuan)

(Additional reporting by David Lin; Editing by Dhara Ranasinghe)