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September 26, 2006

Tom.com to Acquire eBay China and Paypal

posted by MR WAVETHEORY at 9/26/2006 07:16:00 PM
Rumor has it that Tom Online (NASDAQ TOMO) will be taking over eBay Inc 's China business which include eBay China and Paypal China. Tom.com is the distributor of Skype, eBay's online telephone service in China. I think there are two drivers behind this move:

1) eBay is obviously losing marketshare in China to Alibaba and Taobao which are both backed by Yahoo! Inc. When eBay bought eachNet, it has 90% of the online auction market. Today, it has 30% which Taobao, which was unknown in 2003, now has 70% of the market. Quite a turn of events!

2) The People's Bank of China is drafting a regulation which stipulates that foreign investment faces a limit for its shares in an enterprise operating online payment systems. eBay is the only owner of its C2C Website in China and the Paypal service. It was looking for Chinese partners in its startup, but ended up selling off its Chinese branch.

Bye bye eBay Inc. Hello Tom Online.

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