China did not prove to be a profitable market for EBay Inc. but since China is a promising market, EBay Inc. has now partnered with a local firm of China, Tom Online. Tom Online is an Internet portal and wireless services firm based in Beijing. In an interview to Reuters, EBay Chief Executive Meg Whitman said “One thing we've learnt operating here for three or four years is that actually we are going to be better served by tapping into a local partner who has local knowledge.”
Ebay could not be as successful in China unlike their competitor Yahoo Inc. which had also partnered with another local firm Alibaba and have done better than Ebay.
According to the deal about $40 million will be invested by EBay as against the investment of $20 million by Tom Online. There will be 49% stake of Ebay in the venture and Tom Online will have 51% stake. The revenues and profits will be shared by the two companies in accordance to their respective stakes.
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