The China branch of Internet auctioneer eBay Inc is shown in this file photo.(Photo: CRIENGLISH.com)

BEIJING, Sept. 27 -- Internet auctioneer eBay Inc may sell its China operation because of strong competition from Chinese rivals.

    Tom Group, the media group controlled by Hong Kong billionaire Li Ka-shing, may take over eBay Eachnet and its online payment service, PayPal's China division, media reports said yesterday.

    Analysts said it was unlikely that eBay would withdraw from the China market, but it was possible that eBay would retain some stake in its China division while seeking a Chinese partner.

    Neither of the two companies denied the report yesterday.

    "We have no comment on this report now," said Liu Wei, director of public relations with Shanghai-registered eBay Eachnet.

    The 21st Century Business Herald reported that Hong Kong-listed Tom Group would announce its takeover of eBay's China division and its PayPal service within a few days, citing a well-informed source. An agreement between the two companies had already been signed, it said.

    Lee Shuk Wen, an official from Tom Group, said they were "open to the business opportunities on mainland but have no details to disclose at present."

    eBay bought one-third of Eachnet's stake for 30 million U.S. dollars in 2002. It spent another 150 million dollars on the remaining shares of Eachnet in 2003.

    But shortly after that, eBay Eachnet's share in the consumer-to-consumer market went down under competition from taobao.com.

    Taobao.com attracted customers from eBay Eachnet with its free online trading platform, while Eachnet collected a commission of up to 8 yuan (1 dollar) for each item sold on its site.

    By last year, Taobao accounted for 67.3 percent of the C2C market in Shanghai, Beijing and Guangzhou, much higher than eBay's 29.1 percent, according to the China Internet Network Information Center (CINIC), the country's official Internet statistical agency.

    "It is possible that eBay will reduce its investment in China because of its poor performance in the past three years over pressure from its shareholders," said Yu Yang, president of Analysys International, a Beijing-based research company.

    "But China is such a big market that no big multinationals can afford to lose, so it's unlikely that it will completely withdraw from China."

    (Source: Shanghai Daily, Nicholas Ning)