The person familiar with the matter reveals that eBay will build partnership with Tom Online, which will be announced as early as Tuesday. Based on an agreement, eBay will take a 49% stake in the new website while Tom holds 51%. Analysts believe that this deal means a failure to eBay. With the slow US market growth, eBay has been making efforts to expand its market abroad. China is the second largest internet market of the world now, however, the quantity of goods Ebay in China have sold accounts for less than 3% of its total.

The data released by eBay shows that international business accounts for 50% last year, but the sale of eBay in China grows much more slowly than that of eBay’s other overseas websites. The sale serves as the barometer of an auction site’s performance. Due to an increasing number of new competitors, eBay’s growth has slowed down over the recent years. The difficulties eBay encounter proves that it’s not easy to get accustomed to a different culture and compete with local companies.
CEO of iResearch Yang Weiqing says: “It’s a good thing for eBay to cooperate with Tom Online because Tom knows more about the local market.” He also says that as the former No.1 auction site, eBay has been surpassed by Taobao.” The person familiar with the matter says that Tom-eBay will be launched in 2007. With its main website shut down, EBay will be used for international trade, targeting Chinese exporters.

Until now Tom and eBay haven’t decided the name of the new website. Tom CEO Wang Leilei will be the CEO of the joint venture while eBay CEO Liao Guangyu will continue running eBay international trade website. During this restructuring, no one will be fired. EBay will invest 40 million dollars in the joint venture and Tom Online 20 million dollars.

So far, eBay has not confirmed this news. EBay’s spokesperson Hani Durzy said “We never comment on any speculation.” This Monday, EBay shares fell 1.52% to close at 32.42 dollars while Tom rose 2.87% to close at 15.42 dollars.