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eBay Eyes Huge Mainland Potential

US e-commerce giant eBay will focus on developing a customer base in China, rather than expecting to reap a profit from its operations in the nation in the near future.

"China is such a huge market, so we should spare no efforts to cultivate the market, rather than only pursuing profits," said James Zheng, chief operating officer of eBay Eachnet, the Chinese arm of the giant US firm.

Speaking in Beijing at the weekend, Zheng said the number of eBay Eachnet's registered users will reach 10 million "sometime" this week.

Shanghai-based eBay Eachnet, which was acquired by eBay in 2003, had 4.3 million users by the end of 2003 and 8.6 million by September 30 last year.

The growth of eBay Eachnet has made the business one of eBay's fastest growing markets.

But Zheng is far from satisfied with this, as it pales in comparison with the estimated 103 million netizens in China, according to market research firm Analysys.

The world's biggest online auctioneer will continue to invest aggressively in the Chinese market, with the biggest amount of cash going towards advertising.

eBay Eachnet is reported to have signed an advertising contract worth 50 million yuan (US$6 million) with a major Chinese Internet portal.

EBay, which only advertises via the Web in the United States, has adopted a different approach in China, planning to use TV to get its message across.

Compared with the 103 million Internet users, there are more than 1 billion TV viewers in China, so TV advertising has a more powerful impact.

Another focus will be on the improvement of customer services, with the firm more than doubling the workforce in its call center from 70 in 2003 to 150 last year and this year, and it will further increase this figure in 2005.

The improvement of eBay Eachnet's trading platform is another area requiring major investment.

In September, eBay Eachnet unified its trading platform with its parent company.

But eBay Eachnet still requires to do some development to meet the demands of local customers.

The company also needs more investments to build a trusted online trading environment.

Zheng said his business had set up a fund, which gives buyers as much as 1,000 yuan (US$120) compensation and 3,000 yuan (US$360) to sellers, if they are cheated in transactions.

With the expansion, Zheng suggested the company might double the number of its employees this year.

"The number of our registered users grew by 1.5 times in the past year and I think the number of our employees will grow at a corresponding speed," he said.

The US giant currently has about 400 employees in China.

Zheng said eBay's experience in other countries may provide an important reference for eBay Eachnet in drafting a plan to achieve profitability.

eBay's operations in countries like Germany has started to become profitable, when the number of their registered users reaching about one-third of the total number of netizens.

(China Daily January 13, 2005)

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