eBay signs pact China's with Tom Online

eBay announced it is turning over control of its Chinese auction Web site to a Beijing-based partner in a new joint venture, marking a strategic shift as the US company tries to penetrate China's market, an Associated Press report said.

The Associated Press report said the deal with Tom Online comes as foreign companies struggle to adapt to China, the world's No. 2 Internet market.

 Yahoo launched a strategy similar to eBay's last year, turning over management of its China operation to a local partner, commerce site Alibaba.com, the report said.

eBay said it would fold its China subsidiary, eBay Eachnet, into the venture with Tom Online, a popular Chinese provider of games and other value-added online services.
eBay will contribute $40 million and own 49% of the venture, while Tom Online contributes $20 million, owns 51% and has management control.

eBay CEO Meg Whitman said the company is committed to China and she rejected suggestions the Tom Online deal represented a failure of its earlier approach, which included the 2003 acquisition of Eachnet, a Shanghai-based auction site.

Tom Online CEO Wang Lei Lei, who joined Whitman on the conference call, said they plan to build on the company's strong traffic and 75 million registered users for e-mail, search and other services, the report said.