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eBay Hands Over Its China Operations

eBay, like Yahoo, has thrown in the towel on its operations in China. The online auctioneer is shutting down its main Web site and choosing instead to partner with Chinese company Tom Online Inc., which will run the joint venture overseas. eBay is committing $40 million to the unnamed venture, while Tom Online will contribute $20 million. Despite putting up more money, eBay's taking a 49% minority stake in the partnership.

Silicon Valley companies have struggled mightily in China. Google, the world's largest search engine, is a distant No. 2 in Web search, despite opening new operations in China last year. Yahoo, frustrated by its efforts overseas, sold its majority stake in Yahoo China to Chinese ecommerce giant Alibaba.

Analysts weren't surprised, as China's expanding market has proven a tough one for U.S. Web companies to crack. Caris & Company analyst Tim Boyd said the move was "an admission that [eBay] failed in China, on their own at least. But I think that's something the market already knew." EBay had been steadily losing market share to Taobao, the consumer auction unit of Alibaba.com.

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