Last week eBAY's (NASDAQ:EBAY) Chinese auction site eBay EachNet and Chinese internet search leader Baidu (NASDAQ:BIDU) announced a partnership that will see Baidu promote PayPal Beibao in exchange for becoming the exclusive provider of text-based search advertising on the eBay EachNet site. eBay EachNet and Baidu will also develop a co-branded toolbar for faster access to web services such as search and auctions. "We view it as a modest positive for eBay," says Citigroup analyst Mark Mahaney. "This deal could over time modestly reduce eBay's operating losses in China."
'We're very pleased to form this strategic partnership with eBay EachNet,'' said David Zhu, COO of Baidu. ''Today, online shopping is one of the fastest growing segments in China and as the most vibrant online trading community in China, eBay EachNet has been playing a driving role in that development. By leveraging Baidu's leading technology to link users and merchants to relevant advertising across eBay EachNet's platform, this partnership will increase eBay EachNet's ability to deliver value to their users, merchants and advertisers in China.''
In addition to helping eBay support EachNet and PayPal from Alibaba.com's Taoboa and AliPay services, this partnership is important because it shows China remains at the forefront of eBay's thinking and strategy. This was especially unclear given the rumors that circulated just last week regarding a sale of eBay EachNet.
Disclosure: Author is long eBay (EBAY) at time of writing.