Summary

Original source:
http://today.reuters.com/news/newsArticle.aspx?type=internetNews&storyID=2005-10-20T035044Z_01_FOR013752_RTRUKOC_0_US-CHINA-AUCTIONS.xml&archived=False

Details

• The two leading Chinese Internet auction sites escalated a bitter war of words on Wednesday by arguing the superiority of their respective strategies for conducting online auctions.
• Taobao.com, the Alibaba auction site backed by Softbank Corp. of Japan, and in which Yahoo Inc. recently purchased a 40 percent stake, sparked the battle by saying its site would be free of charge for three more years.
• "We call on eBay to do what's right for this phase of China's e-commerce development and make your services free for buyers and sellers in China," Jack Ma, chief executive of Alibaba.com, said in a statement.
• It was a clear shot across the bow of rival eBay, which acquired China's largest online auction site, EachNet, in 2003.
• "'Free' is not a business model," eBay fired back in its own statement.
• "It speaks volumes about the strength of eBay's business in China that Taobao today announced that it is unable to charge for its products for the next three years."
• EBay, the decade-old online auction giant that now counts 168 million users worldwide, has the philosophy that completely free is unhealthy.
• Paying something ensures that a marketplace won't become a dumping ground for unwanted goods, it argues.
• "It is not good for a buyer or a seller because it clutters the marketplace," eBay spokesman Hani Durzy said, noting that sellers may list 20 of the same, unpopular item when price is no object.
• "Some amount of pricing ensures a higher quality supply," he said.
• Alibaba.com said its Taobao Chinese-language consumer auction site will remain free for buyers and sellers for three more years, until at least October 2008.
• It also plans to invest $120 million to expand Taobao's marketplace and declared that its ambition was to create 1 million jobs in China for entrepreneurs selling goods on the Taobao site.

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