EBay to put China site into JV: source

LOS ANGELES (Reuters) - EBay Inc. <EBAY.O> will roll its China site into a joint venture run by a Chinese partner, a source said, in the latest example of a Western media firm ceding control of its China operation in the face of a tough market.

Under the plan, eBay, the world's biggest online auctioneer, will put its China eBay business, which it purchased for $180 million, into a venture with Beijing-based Tom Online <8282.HK>, a person familiar with the matter said.

Tom Online <TOMO.O>, an Internet and wireless media specialist, would hold a controlling 51 percent of the venture, with eBay holding the remaining 49 percent, the person said.

Shares in Tom Group <2383.HK> and its Tom Online <TOMO.O> subsidiary, both of which are controlled by Hong Kong tycoon Li Ka-shing, were suspended from trade in Hong Kong on Tuesday. Tom Online had risen nearly 14 percent and Tom Group 5.56 percent.

EBay's decision was a strategic one aimed at strengthening its position in the region and not an exit, as some have described it, the person familiar with the matter told Reuters.

There were no plans for job reductions in China, the person said, adding an announcement could come as early as Tuesday.

A spokesman for eBay said the company would not comment on speculation, and a Tom Online spokesman also had no comment.

Analysts say eBay is reluctant to retreat from China as it did from Japan in 2002. EBay shut its nascent business there after failing to make headway against market leader Yahoo Japan Corp. <4689.T>

PAYPAL DEAL

In a separate deal, eBay's PayPal online payment unit, which set up shop in China last year, will announce its own deal to form a joint venture with a locally based electronic payment specialist, according to local media reports.

Under that deal, PayPal will give $105 million for a 33 percent stake in the venture with UMPay, which is itself a joint venture between China Mobile <0941.HK>, China's top mobile carrier, and China UnionPay, operator of an electronic financial system linking most major Chinese banks.

A PayPal spokesman in China had no comment on the reports.