US based online auction company EBay Inc. is exiting the China market. eBay said its China-based subsidiary, eBay EachNet, and TOM Online will enter into a joint venture. where eBay will take 49 percent stake and Tom Online Inc., an Internet company based in Beijing will hold a 51% stake. The new website will replace eBay’s China website. eBay will put up $40 million and Tom Online will contribute another $20 million.
Commenting on the joint venture, Meg Whitman, President and CEO, eBay Inc said, “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. This agreement is a sign of our continued commitment to delivering the best online buying and selling experiences in China.”
Both companies would make financial contributions to the venture. eBay will contribute US$40 million, while TOM Online will contribute US$20 million. Further, the companies said that they could equally share in an investment of up to an additional US$10 million if mutually agreed upon. eBay said that it would also contribute its EachNet subsidiary, while TOM Online would contribute