Ebay still can't catch up in China

Chinese consumers spent more than $1bn buying products from each other in online auctions during last year's Christmas season, according to a recent survey.

The world's leading online consumer auctions firm, eBay, maintained its number 2 position in the market. Ebay handled 29 percent of auctions, leaving it a distant second to local rival Taobao, which brokered more than twice as many. Taobao is a subsidiary of China's leading business-to-business auctions firm, Alibaba.

Ebay's difficulty in expanding its foothold in China, despite great experience and resources, continues a trend in which world leaders in internet services play second fiddle to local upstarts in China.

Google, for example, is a distant second to China's Baidu in the search market, according to local statistics. Yahoo was forced to turn to Alibaba for local knowledge and connections, after having trouble attracting the Chinese to its portal and services. Yahoo paid $1bn for a sizable minority stake in Alibaba.

Meanwhile, foreign-developed instant messaging services like Microsoft's MSN messenger have been left in the dust by Tencent's QQ instant messenger.

After strenuous efforts to recover lost market share from Taobao, Ebay has followed Yahoo's lead by inking a deal with a local partner that gives it a minority stake in its own operations in China. However, this agreement was only signed late last year, so any impact is not visible in the fourth quarter data cited here.

Ebay's partner is Hong Kong-based Tom Online, which has recently suffered such severe setbacks in its once-lucrative Chinese mobile services subsidiary that it is now looking at delisting the company.

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