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EBay Invests Heavily on Market Potential

The US online auction giant eBay Inc will pour US$100 million into its China operations to further tap the world's second largest Internet market.

The NASDAQ-listed company made the announcement Thursday after releasing its fourth quarter and full-year financial results.

"China is an important part of our international portfolio. China's Internet market is developing more rapidly than anticipated, and eBay EachNet's growth has been remarkable," said Meg Whitman, president and CEO of eBay, in a statement.

"As a result, we see even greater opportunity in China today than we did six months ago," she added.

The US business acquired its Chinese counterpart Eachnet in 2003 for US$180 million and rebranded it eBay Eachnet.

Lilian Liu, a spokeswoman from eBay Eachnet, said that the investment will be used to build a more secure, convenient and vibrant online trading platform for Chinese Internet users.

"There are 94 million netizens in China, but our user population is only 10 million, so our goal is to help the remaining Internet users enjoy the pleasure of online trading," said Liu of eBay Eachnet, whose Chinese name means "pleasure of trading."

James Zheng, chief operating officer of eBay Eachnet, said in an interview with China Daily early this month that his firm's biggest outlay is on advertising.

Currently eBay Eachnet advertises on almost all major websites in China, but this year, it will start spending millions of yuan on TV advertising.

EBay rarely advertises on TV, but it is taking the unusual step to rapidly expand its user base as China is home to more than 1 billion TV viewers, but only 94 million Internet users, as figures from the end of 2004 show.

Another area of investment for the company is Internet security.

Cheats remain the top concern for online traders in China, so eBay Eachnet has decided to set up a compensation scheme to refund those caught out by their actions, in which buyers can get back as much as 3,000 yuan (US$360) and sellers a maximum of 5,000 yuan (US$600).

Zheng said another area in need of further attention is service quality.

The online auction firm has expanded the number of employees in its call center from 70 in 2003 to 150 last year, and this number is expected to increase as the business grows.

EBay Eachnet used the occasion to reveal that its user population had passed the 10 million mark, compared with 4.3 million by the end of 2003.

The company also said the number of new goods listed daily stands at 6.6 million, compared with 6.4 million at the end of the third quarter.

The volume of total transactions in the fourth quarter reached 740 million yuan (US$89.37 million), 50 million yuan (US$6 million) higher than that of the third quarter.

(China Daily January 21, 2005)

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