TOM Online mates eBay for China's e-commerce market
Hong Kong-based TOM Online and eBay Inc. announced here Wednesday a joint venture agreement that targets the growth of e-commerce and m-commerce in the rapidly growing Chinese market.
According to the agreement, eBay EachNet, eBay Inc.'s China-based subsidiary, and TOM Online will combine expertise to build a new China marketplace in 2007 with eBay having the joint venture' s 49 percent stake while TOM Online holding the rest 51 percent stake.
The new venture builds on the existing relationship between TomOnline and Skype, eBay Inc.'s online communications business.
Both companies will make financial contributions to the venture, including a 40-million-U.S.-dollar cash contribution from eBay and 20 million dollars in financing from TOM Online.
Upon the launch of the new marketplace, eBay EachNet users will be invited to transition to the new site, and TOM Online will expand its currently 75 million users traffic to the site as well, according to the deal.
"EBay has helped pioneer e-commerce in China, and by combining our expertise with that of a strong local partner like TOM Online, we are even better positioned to participate in this growing market," Meg Whitman, president and CEO of eBay Inc., said in a press release.
Wang Lei Lei, CEO of TOM Online, said: "eBay is one of the world's most recognized e-commerce brands and TOM Online has a proven track record of delivering outstanding services to Chinese consumers."
"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 companies' strengths in the emerging m-commerce sector," Wang said.
If mutually agreed, the two companies can equally share in an investment of up to an additional 10 million dollars, according to the agreement.
In addition, eBay will also contribute its EachNet subsidiary, while TOM Online will contribute local management expertise, technology, and brand.
According to the agreement, Wang Lei Lei will be chief executive officer of the joint venture, and drive the vision for the new local, China marketplace while eBay EachNet CEO Jeff Liao will provide management support from eBay to the joint venture.
China has 123 million Internet users and more than 400 million mobile users as of June 2006.
Both companies expected the e-commerce market value in China could rise to 46 billion yuan (about 5.9 billion dollars) next year in an "explosive growth," according to IResearch.
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