Top > Business > 2006 > December > 2006-12-31

Chinese firms set to win big stakes in eBay and PayPal

Doing business in China, maybe one of the least understood cultures and economic systems is no mean feat. With an often overwhelming government presence, barriers of language and a very different approach to business, many enterprises attracted by the most populous nation on earth, the Asian tiger, find that they are getting less than they bargained for. But having a foothold in one of the world`s fastest growing markets with a yearly rollover of $75 billion in ecommerce, companies are not giving up easily.

After media companies Yahoo and Time Warner both joined forces with successful Chinese businesses after a rocky start on their own, now eBay and PayPal are rumored to be pursuing similar deals, essentially handing over their Chinese Branch Operations back to the Chinese local entrepreneurs. PayPal is planning to buy 33 percent of UMPay, a local electronic payment provider, for $105 million, and eBay could join into a venture with Tom Online, a Internet and wireless media company based in Beijing.

Although both eBay and PayPal declined to comment, an insider source stressed that a move by eBay to buy a 49 percent stake in the Chinese Multimedia Company should not be interpreted as part of a retraction strategy, but is meant to strengthen eBay`s position within the competitive Chinese market. The goal of this venture would be to roll eBay`s operations in China into a locally controlled group. The announcement is expected to be as soon as this week.