eBay's Interest in Gmarket Shows Weakness in Its Asia Strategy

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Includes: EBAY, GMKT
by: The Deal Economy

Proving that eBay Inc.'s (NASDAQ:EBAY) efforts to conquer Asia won't ever be compared to Genghis Khan's, the online auctioneer's interest in securing a stake in its South Korean rival Gmarket Inc. (GMKT) is yet another sign of an Asian strategy gone awry.

eBay on Wednesday said it is in talks to buy up to 40% of Gmarket from the company's largest shareholder, South Korean online mall operator Interpark Corp., and its chairman, Ki Hyung Lee. No details of a potential deal were available and San Jose, Calif.-based eBay said it would not comment any further until the talks have concluded.

The news suggests that eBay is once again being beaten in an Asian market and, instead of trying to crush an enemy, it is seeking to sleep with it. The company has made a number of missteps in Asia, including shuttering its operations in Japan in 2002 after it was unable to compete with Yahoo! Inc.'s (YHOO) auction site. In 2006, eBay formed an auction partnership with China's TOM Online Inc. despite spending at least $180 million to buy Chinese auction company EachNet and sinking $100 million into its China operations in an attempt to take market share from China market leader Alibaba.com.