eBay #1 in China? No, though Meg Whitman claims "yes".

| About: eBay Inc. (EBAY)
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eBay (ticker: EBAY) CEO Meg Whitman discussed the company's Chinese
subsidiary eBay Eachnet and the competitive environment in China at
its Analyst Day in February. Here are excerpts from her comments followed by a
discussion of Chinese online auction competitor Taobao from The China Stock Blog:


On eBay Eachnet and its Chinese competition:

Today,
eBay Eachnet is by far the number one e-commerce site in China. We're
helping China to define it's e-commerce future and it gives me
tremendous satisfaction to see eBay Eachnet helping so many young
Chinese taste entrepreneurship for the first time.

Now like in the early days of the net in the United States and other
countries, there are a bunch of small competitors in China nipping at
our heels and I don't blame them. They see the opportunity too, but
guess what? We love competition. Absolutely love it. We have from the
earliest days. It motivates us. It makes us hungry. It makes us
stronger and it makes us very, very determined. We are on a tear to be
the undisputed winner in China and the additional $100 million
investment we announced last month should be a sign of an unmistakable
commitment and an unstoppable determination to win that market.

On eBay's latest results:

Now
the good news is we're already seeing the results of that determined
effort in China. Data that shows that we had a fantastic start to 2005.
Just as we pulled ahead of able competitors in the U.S. and Germany in
1999 and 2000, we're pulling farther ahead in China today.

(Quotes are from the CCBN StreetEvents transcript.)

Commentary from The China Stock Blog:

Ebay the #1 e-commerce site in China? Let's
ask Alibaba, whose online auction subsidiary Taobao.com is competing
with Ebay in the China market. How can we ask them? Fellow China
blogger Bill Bishop was kind enough to provide an Alibaba presentation that is currently circulating in China.

First, some background. The Chinese online auction market consists
of 3 players - eBay Eachnet, Taobao (operated by Alibaba), and 1pai (a
joint venture between Yahoo! (ticker: YHOO) and Sina.com (ticker:
SINA)).

According to a combination of statistics from market research firm,
iReaseach.com, and Taobao, the online auction market shifted
dramatically in 2004. In Q1, eBay had 90% of the gross merchandise
volume (GMV) in the online auction marketplace, to Taobao's 9%. By Q4,
eBay had 53% to Taobao's 41%.

The Alibaba presentation claims that Taobao received the #1
e-commerce traffic ranking in China from Alexa.com at the end of 2004.
Alexa.com also cited Taobao as the 23rd most visited site in the world,
ahead of all other e-commerce sites in China.

For the first time, Taobao exceeded eBay for the most new quarterly
users in Q4 2004. As of the end of Q4, Taobao had 4.7 million listings
to eBay's 229,000! Taobao also cites an iResearch report showing that
users not only prefer Taobao by a sizeable margin, but enjoy Alipay,
Alibaba's online payment system as well. (eBay CEO Whitman hastily
dismissed a question when asked about Alipay at Analyst Day).

So while Meg Whitman says that eBay is "by far the #1 e-commerce
site in China", she is talking about gross merchandise volume and
number of registered users. eBay said it reached 10 million users
in January, to Taobao's 4.0 million at the end of 2004. Taobao is more
straightforward. It claims to be the "#1 consumer e-commerce
marketplace" as defined by "product listings and traffic ranking". And
though eBay just earmarked another $100 million toward its Chinese
operation, the statistics above show that Taobao is definitely still in
the game and quickly gaining ground.

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