July 6, 2005

eBay Plans PayPal Launch in China

SHANGHAI -- Online auctioneer eBay Inc. said on Wednesday its plans to launch its PayPal payment service in China by the end of this year, joining a growing list of electronic payment services in the market.

"It will happen within this year, but no date has been announced," an eBay spokesman told Reuters. "We will have an announcement event when there are more details."

PayPal's entry to China would come as eBay mounts an aggressive campaign in the country amid slowing growth in its home U.S. market.

The company said earlier this year it would invest $100 million in China in 2005, or about 2 percent of its expected global revenue for the year.

Chief Executive Officer Meg Whitman has also said that China could become eBay's second largest market after the United States within five to 10 years if eBay plays its cards right.

In May, eBay said it had 11.6 million registered users in China, and was adding about a million per quarter.

The company entered China by buying local online auctioneer EachNet for $180 million. Since then, it has installed its own management at the top of the company and has embarked on an aggressive marketing campaign to popularise the service.

The addition of PayPal, which was exploring China as early as last fall, would be part of that campaign.

The service -- which eBay acquired in 2002 for $1.5 billion -- is a natural fit for eBay, providing online traders with an easy way to receive and make payments for goods.

China is one of the world's fastest growing e-commerce markets, despite a lack of major electronic payment systems in a country where cash is still king.

The nation is already the world's second largest Internet market after the United States, with about 100 million users, according to official data.

The number of online shoppers is expected to reach 16.2 million by 2007, with 29.6 billion yuan ($3.6 billion) in annual spending by then, according to Web-focused market research firm Shanghai iResearch.

PayPal's entry to China would come as a growing number of companies launch similar electronic payment systems in the country.

E-commerce company Alibaba recently launched its own online payment system called Alipay, while venture capital-backed SmartPay Jieyin Ltd. has also rolled out an electronic payment system catering to the mobile telecoms market.


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