PayPal Plans Trip to China

eBay (Nasdaq: EBAY) probably needs some aggressive moves, given recent word that Google (Nasdaq: GOOG) may soon wage war against the online auction king's powerful PayPal unit. Reuters reported today that PayPal will venture into China within the course of this year.

The importance of the Chinese market is more than clear. With rapidly increasing Internet use among its huge population, China has become a key expansion destination for eBay and many other companies. In fact, although eBay has branched out into many different countries, the company has previously stated that it considers China its largest potential market next to the U.S.

In eBay's most recent conference call, CEO Meg Whitman said that eBay EachNet, a fairly recent acquisition that concentrates on the Chinese market, is the country's No. 1 e-commerce player. PayPal is currently a crucial part of e-commerce, and eBay aims to ensure it remains one of the Net's major payment options. In that same conference call, Whitman said, "We feel confident that PayPal can become the online wallet for an entire global generation of Internet shoppers."

Considering investors' continuing sour outlook on eBay lately -- despite signs that things are getting back on track -- this type of move can't come too soon. eBay will have to be quick and aggressive, not only to capture China's growing market of Internet shoppers, but also to beat Google in that same area. After all, Google's plans likely include bids for domination of major markets outside of the U.S.

A successful move into China might well bring an end to many investors' disappointment in eBay's signs of slowing growth. Regardless of whether Google can do it better -- and we still don't know exactly what e-payment plans Google has up its sleeve -- it wouldn't spell good news for eBay if Google got there first.

eBay is a Motley Fool Stock Advisor stock. To find out what other stocks Tom and David Gardner favor, click here. Or, if you're interested in the China angle to this story, remember the China Connection discussion board, only on Fool.com.

Alyce Lomax does not own shares of any of the companies mentioned.