Online auction firm eBay Inc. (NASDAQ: EBAY) is shutting down its main Chinese web site and is launching a joint venture with a local partner, marking a strategic shift as the U.S. company tries to penetrate China's market.
The web-auction giant will merge its Chinese auction site into a new site with Tom Online Inc., a Beijing-based Internet portal and wireless service provider.
The new online marketplace to be built by the joint venture will provide an enhanced user experience, tailored for the China market, and will capitalize on our companiesâ€™ strengths in the emerging e-commerce sector said Wang Lei, CEO of TOM Online.
Lei also said the company plans to build on TOM's strong traffic and 75 million registered users for e-mail, search and other services.
Under the deal, eBay will invest $40 million and will take a 49 percent stake in the venture. Tom Online will invest $20 million and have 51 percent. The companies will split revenue accordingly.
EBay first started its Chinese operations when it bought a stake in local auction site EachNet in 2002. Ebay later bought out the firm for $180 million.