eBay will sell its China division and PayPal service to Tom.com, the Shanghai Daily reported, citing the 21st Century Business Herald. However, Pacific Epoch said eBay is negotiating with Tencent about an acquisition, citing a rumor reported by Sohu. Pacific Epoch also reported another rumor that eBay Eachnet is for sale, and Tencent is an interested buyer.

Earlier this week, news of eBay Eachnet's CEO resignation came to light. Paypal China general manager Jeff Liao is eBay Eachnet's new CEO, and, according to Shanghai Daily, was appointed "only to carry out the takeover."

Citigroup analyst Mark Mahaney had issued a report on September 24 stating eBay "may well need to develop a strategic relationship in China along the lines of the Yahoo!-Alibaba partnership." Mahaney pointed to Alibaba's free Taobao marketplace, which competes with eBay Eachnet, as the source of eBay's woes in China. "Despite a reported $100MM marketing campaign in 2005, eBay's position relative to Alibaba does not appear to have improved."

Mahaney also reported on eBay's challenges in South Korea, which could become an "increasingly expensive competitive landscape for eBay."

http://www.shanghaidaily.com/art/2006/09/26/293029/Report__Tom_com_to_buyout_eBay_China__PayPal.htm

http://www.pacificepoch.com/newsstories/76402_0_5_0_M