Silicon Valley-based online auction pioneer eBay Inc announced on Monday it will pay US$30 million in cash for a 33 per cent stake in the Shanghai-based online trading website EachNet in its first step into China's fast-developing cyberspace.

According to the agreement signed by both sides, eBay has the right to expand its holdings in EachNet.

"The strategic alliance between EachNet and eBay will further consolidate our leading role in the country's burgeoning e-commerce industry," said Shao Yibo, chief executive of EachNet.

Founded in 1999, EachNet has recruited 3.5 million registered users.

Although the development of the Internet in China has skyrocketed, business orientated portals have had a difficult time generating revenue.

But eBay has made success with its auction model in the United States and has been expanding abroad.

In January eBay reported a fourth-quarter net profit of US$25.9 million and expects revenue for the first half of 2002 to be between US$490 and US$510 million.

Deal important for eBay to build global marketplace

"The deal with EachNet is an important step forward in eBay's strategy to build a truly global marketplace," said eBay Chief Executive and President Meg Whitman.

She said in a statement that e-commerce revenue in China is expected to grow nearly 12 fold to more than US$16 billion over the next three to four years.

Lu Benfu, director of China Internet Development Centre, believes that the move is an experiment for eBay to expand its market into China.

He said China still has a long way to go for Chinese e-commerce to be really global.

Statistics from the China National Network Information Centre showed that China's Internet users had topped 33.7 million by the end of last year, up 49.8 per cent over the same period last year.

It also showed that there were 10.65 million people purchasing items online, accounting for 31.6 per cent of total Internet users. The satisfactory rate for online trading has also shot up from 27.72 per cent in 2000 to 38.3 per cent last year.

(People's Daily March 19, 2002)