China had proved too difficult for U.S. e-commerce giant eBay to crack despite it throwing millions of dollars to do so. But it appears it is now ready to make another foray into the domestic online sales arena by partnering local operator Xiu.com.
Chinese tech site tech.qq.com reported Thursday, citing the Chinese luxury retailer's public relations chief Xu Qin, that both companies will indeed be entering into a partenrship. However, she was not at liberty to reveal the details of the collaboration, or whether eBay will be pumping in money into the Chinese company.
"Everything must wait until the official announcement on Nov. 12," Xu stated in the report.
However, other unnamed sources close to the deal said this will be a "heavyweight partnership" and they were not discounting the possibility of a fund injection by the American company.
An eBay spokesperson said the company is not "confirming or denying reports in China", but did confirm it will be having a media event in Shenzhen, China, on Nov. 12 to "discuss future plans".
EBay made an unceremonious exit from China's e-commerce scene some six years ago, despite spending US$150 million to buy top Chinese e-commerce operator EachNet in 2003. It eventually offloaded its operations to another domestic player Tom Online in 2006, which held 51 percent share in the joint venture while eBay retained a 49 percent stake.
According to a separate report by Bloomberg Businessweek Thursday, the eBay-Xiu.com partnership marks the first major drive by the U.S. company's CEO John Donahoe into China since he took over in 2008. If it was not easy the first time round, the second foray might prove even more challenging: Alibaba Group's Taobao.com is the country's largest online retailer with about 90 percent of the business-to-consumer market.
The company admitted as much in a January regulatory filing: "Even if we are successful in developing new markets, we often expect the costs of operating new sites to exceed our net revenues from those sites for at least 12 months in most countries."
The potential payoff is enticing though, given the attention the Chinese government is putting in to grow this sector. In its E-commerce 12th Five-Year Plan (2011-2015) report in March, the Ministry of Industry and Information Technology will help to drive the value of online shopping in China to 18 trillion yuan (US$2.86 trillion) by 2015 with appropriate policy measures.