Barron's says China is EBAY's wild card

by: Ezra Marbach

According to Barron's (subscription required) eBay's (ticker: EBAY) position in China's online auction market
is the biggest wild card in trying to forecast its long-term growth. Here is a short extract from Barron's:

....The problem is, while China could be huge for eBay,
it also could be a zero. Investors haven't forgotten that eBay had its
biggest failure in Asia, when it tried but failed to make a dent in
Japan, where the online auction market is controlled by Yahoo! Japan.
EBay exited Japan in 2002. And as it did in Japan, eBay now faces a
serious competitor in China, this time from a site called Taobao.com,
owned by the business-to-business e-commerce company Alibaba.com.


Other key points


  • According to eBay, its $100 million investment in China in 2005 will have a direct impact on per-share
    earnings of about 2.5 cents a share.
  • The $100 million is being spent on marketing and software.
  • Bear Stearns Internet analyst Bob Peck says there
    are about 300 million middle-class Chinese, a market larger than the
    entire US population.
  • eBay says the overall e-commerce market in
    China will be larger than the German market in two years, and will
    exceed that of Japan in two or three years.

Comment: More on eBay in China: eBay #1 in China? No. But CEO Whitman says "yes".