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Alibaba, EBay Square off

Competition in the Chinese e-commerce market is intensifying, as two major players, eBay Eachnet under the US giant eBay and the largest Chinese e-commerce company Alibaba, pump resources and effort into building secure online payment systems.

"This year will be critical for the development of e-commerce and online payment," said Jack Ma, CEO of Alibaba and Taobao, Alibaba's subsidiary online auction website.

He said yesterday at a press conference that his company will use the experience of Taobao's online payment tool AliPay for the business-to-business e-commerce website Alibaba.

With Alipay, buyers can deposit money into a bank account designated by Alibaba and Taobao. Sellers only receive payment when the deal is verified by buyers.

Alibaba and Taobao have partnered with four major Chinese banks to guarantee the security of the system and ease traders' worries.

The Hangzhou-based e-commerce company has also promised to refund all losses, if traders use Alipay in the transactions.

According to Ma, 70 percent of transactions made on Taobao.com have used Alipay since the website introduced the service in 2003.

He expected total registered users of Alibaba and Taobao to reach 30 million this year from 11 million at the end of 2004.

EBay Eachnet, in fierce competition with Taobao, also announced yesterday that it would spend more than 100 million yuan (US$12 million) this year to launch a new online payment system.

The US auction giant said last month that it would invest US$100 million in eBay Eachnet this year with the 100 million yuan (US$12 million) part of that commitment.

James Zheng, chief operating officer of eBay Eachnet, said his firm will launch a new online payment tool in the first quarter, combining the situation of China's e-commerce market with the technical expertise of eBay's US arm.

EBay Eachnet launched a payment system called Escrow in October, similar to AliPay, to create a more secure online payment environment for traders.

The online auction firm also opened a China Service Center, serving customers in the Chinese mainland, Hong Kong, Macao, and Taiwan. Zheng said the center will increase staff numbers this year from 150 to 400. EBay Eachnet's registered users topped 10 million on January 13.

Henry Yang, president of Shanghai iResearch Co Ltd, a professional Internet industry consultancy, said trading security was still a major obstacle in China, so the industry still needs to strive to ease people's e-commerce concerns.

According to iResearch, the total trading volume of e-commerce in China will grow from 440 billion yuan (US$53.14 billion) in 2004 to 620 billion yuan (US$74.88 billion) this year.

(China Daily February 3, 2005)

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