What a difference two months can make! Back in September, China's 21st Century Business Herald was reporting that eBay (NASDAQ:EBAY) was ready to bow out of the competitive Chinese market and hand the keys to TOM Online (NASDAQ:TOMO). This morning, eBay confirmed its commitment to the world's most populous nation by beefing up its presence through a deal with Baidu (NASDAQ:BIDU).
As China's leading search engine, Baidu runs the nation's most popular website. eBay can respect that; it found itself bowing out of Japan shortly after Yahoo! (NASDAQ:YHOO) teamed up with Softbank to form Yahoo! Japan.
eBay's partnership with Baidu will be symbiotic. Baidu will promote eBay's financial payment site in China, while eBay will feature Baidu's paid-search ads on its auction site. The two companies will also team up to release a browser toolbar.
This isn't the first time that eBay has played nice with a search engine by brokering a deal to serve up paid-search ads on its popular online marketplace. Earlier this year, it hooked up with both Yahoo! and Google (NASDAQ:GOOG). However, Yahoo! and Google can also be fierce competitors. Yahoo! and eBay have locked horns with rival auction sites all over the world, and Google Checkout is a thinly veiled threat to eBay's PayPal. This morning's pact with Baidu offers a more logical working relationship, and it comes at a time -- and in a region -- in which eBay could use friends in high places.
eBay's EachNet auction site and PayPal Beibao micropayment service could use a boost in what has become the world's second-largest Internet market (even though only about 10% of the country is online). The market has little choice but to grow, and eBay would have been insane to bow out -- as was speculated two months ago -- so early in China's development.
The "buy it now" company would have been dense to hit the "leave it now" button in China. It's nice to see eBay play for keeps when the stakes are this high.
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Longtime Fool contributor Rick Munarriz is an eBay junkie, with 169 positive feedback ratings to prove it. He does not own shares in any of the companies in this story. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.
