eBay Cuts Fees in China; A Sign of Weakness? (EBAY)

eBay China announced yesterday it will stop charging sellers for opening online shops (though it continues to charge listing fees and collects a commission on completed deals). eBay China previously charged users as much as $62 a month for each online shop. The move aims to compete with rival Alibaba's Taobao.com which has promised free service until 2008.

But if business were going so well would such a move be necessary? You may remember what eBay (ticker: EBAY) CEO Meg Whitman said during management's Q3 2005 conference call in October:

EBay’s business in China also had an excellent Q3 delivering accelerating GMV and transaction revenues. Our Chinese marketplace is more vibrant than ever, providing sellers with strong ASPs and conversion rates. And we added nearly 2 million new users in Q3, bringing the total to 15.1 million, by far, the largest online trading community in China. A power seller on eBay recently told me that eBay is the only marketplace in China on which Chinese sellers can build a serious long-term business. I’m extremely pleased by the progress we’ve made in China and by the thriving ecommerce environment we are creating for a whole new generation of Internet users.

.....and in China, strong listings growth and increasing conversion rates drove acceleration in year-over-year growth rates for both GMV and revenue. Our efforts to drive continuing strong user acquisition and activation as well as to fortify our position as the most trusted place to trade with other Chinese users have led to outstanding local growth metrics. With both its thriving local business and a rapidly growing export business, we are excited about our position in China.

And actually, a fun one (editor: marketing campaign) is going to be in China. We are actually going on television, in print, outdoor, and in a major marketing push for China in Q4. The commercials go live in seven days. And we’re really looking forward to a great holiday season in China. So I think we’ve got it right this year. The proof will be in the pudding.

EBAY chart.