eBay says wins market share from Alibaba

By Shailendra Bhatnagar and Doug Young

HONG KONG (Reuters) - Online auctioneer eBay Inc. (EBAY.O: Quote, Profile, Research, Stock Buzz) believes it is winning back share from rival Alibaba in the fast-growing China market, following its recent elimination of many fees, eBay's China chief said on Thursday.

U.S.-based eBay has spent much of the last two years fending off advances in China from Alibaba, the company backed by Internet giant Yahoo Inc. (YHOO.O: Quote, Profile, Research, Stock Buzz), which offers online auction services for free.

EBay entered the market earlier, also as a free auction service, but later added fees. It has said before that "free is not a business model".

But last year it quietly began eliminating a number of its fees, including basic charges for setting up stores, and commissions for the completion of some sales, Martin Wu, the company's China chief executive, told Reuters.

Sellers on the service can essentially avoid three of the four types of fees that the company charges, with only a listing fee of around 0.30 yuan (3.7 U.S. cents) or more mandatory, he said.

"The strategy has paid off," he said at the Reuters Global Technology, Media and Telecoms Summit. "Our fourth quarter grew dramatically. The first quarter is very healthy. ... We believe we're gaining market share here."

In the fourth quarter, TaoBao, the Alibaba service that competes directly with eBay, added 3.9 million users compared with an increase of 2.8 million by eBay.

The U.S. online giant has 19 million users at the end of January in the fast growing Chinese economy, up 85 percent from last year, Wu said.

The company previously said it had 17.9 million users in China at the end of the year, while TaoBao had 13.9 million.

China has more than 100 million Internet users, the world's second largest.

Among the international players, online retailer Amazon.com Inc. (AMZN.O: Quote, Profile, Research, Stock Buzz) and online search leader Google Inc. (GOOG.O: Quote, Profile, Research, Stock Buzz) have a growing presence in China, where more than $1 billion worth of online customer-to-customer transactions took place in 2005.

GROWING ASIA

More than 30 million of eBay's 181 million registered users worldwide are in the Asia-Pacific region, where it operates in 10 diverse countries including Australia and India.

One nation where it does not actively operate is Japan.

Jay Lee, eBay's vice president for the Asia-Pacific region, said the company would consider returning to Japan given the right conditions, but declined to be more specific.  Continued...