eBay Tags TOM for Help

This isn't the way it was supposed to be. The mighty eBay (Nasdaq: EBAY) in retreat mode in the world's most populous nation? Well, according to news broken by The Wall Street Journal, the marketplace master is going to shutter its site for consumer-based auctions and partner with TOM Online (Nasdaq: TOMO) to give it a second go with a local partner.

It will still keep its namesake site going as a way for Chinese businesses to engage in overseas trading, but it will pay for a 49% stake in a new venture with Internet and wireless content provider TOM Online. eBay will see whether it can make a dent in the Alibaba.com site in which Yahoo! (Nasdaq: YHOO) acquired a 40% stake last year by paying a cool $1 billion.

Is there a lesson here for investors? You bet. Don't assume that something will work well overseas just because it does stateside. Does anyone really think that News Corp. (NYSE: NWS) is going to have a cakewalk as it rolls out its MySpace social network in China next year? Anyone who figured that Google (Nasdaq: GOOG) would smoke Baidu (Nasdaq: BIDU) in paid search in China has had a rude awakening over the past year, with Baidu nibbling away at Google's market share.

Partnering with a seasoned local is often the smartest way to go. Yahoo! could have told eBay that. It has now successfully chased eBay out of both Japan and China by simply teaming up with a local favorite and being content with a minority stake.

The move won't affect eBay's near-term financials because China makes up only a small chunk of the company's business. However, with stateside growth decelerating in recent years, shareholders will have to rethink the thesis that headier overseas growth will save the day for eBay.

As much as eBay loves to be the purveyor of "It" this holiday season, "It" apparently isn't a universal export.

Yahoo!, eBay, and TOM Online are Motley Fool Stock Advisor recommendations. To see why these three stocks have made it into this market-crushing newsletter, take a free, 30-day trial today.

Longtime Fool contributor Rick Munarriz has been to mainland China just once, but he's longing to brush up on Mandarin and make it another go in the future. He does not own shares in any of the companies mentioned in this story. Rick is also part of the Rule Breakers newsletter service, where Baidu is a recent selection. The Fool has a disclosure policy.