eBay (Nasdaq: EBAY) is the latest of the large Internet companies to make a move into a country with a vast population and substantial growth potential. Today, the company said it's purchasing Baazee.com, an online auctioneer stationed in India.
This is, of course, a good way for eBay to ensure a foothold in an international market set for growth. Motley Fool Stock Advisor pick eBay will buy Baazee.com -- which currently has 1 million registered users and is considered the largest online marketplace in India -- for $50 million in a transaction during the third quarter that is not expected to have an impact on the former's financial results for the year.
Today's move is a bit of a departure from the recent "China trend" from Internet heavyweights. Just last week, Google said it would acquire a stake in Chinese search site Baidu, while Yahoo! (Nasdaq: YHOO) announced the launch of Chinese search portal Yisou.
That's some exciting stuff, especially since China boasted 79.5 million Internet users at the end of 2003 -- second only to the U.S. in terms of people surfing the Internet.
Of course, eBay has already done a bit of a land grab in China by acquiring a Chinese company called EachNet. However, for all the recent excitement about China and the Internet, the fact remains that operating in that country can be rather risky. Take into consideration the warnings in eBay's SEC filings concerning that country's regulations, which breed some degree of uncertainty.
In some ways, then, India may be a less risky environment. (For some background on the country and its economy, click here.) On the other hand, when it comes to being wired to begin with, India has grown slower than China. According to eBay's press announcement, IDC data suggests that 17 million Indians are Internet capable at the moment, a number that is expected to increase to 30 million by 2006.
India, of course, is a hot spot in the current outsourcing debate. Regardless of how you feel about the topic, the flow of jobs to India is creating opportunities for U.S. companies and their services. Today's move gets eBay in on the ground floor of a country with an economy that's developing and arguably well aligned with what eBay provides. This deal also seems a small price to pay to further eBay's pleasant brand of world domination.
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Alyce Lomax does not own shares of any companies mentioned.
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