San Jose, California, USA, and Shanghai, People’s Republic of China, March 17, 2002 – eBay (Nasdaq: EBAY; www.ebay.com ), the world’s online marketplace, and EachNet, the leading online trading community in China, have formed a strategic business relationship. eBay will invest $30 million in cash to acquire a 33% interest in EachNet on a fully diluted basis, and the two companies will share best practices to further expand online trade in China. Through this alliance, EachNet will further extend its e-commerce leadership in China, and eBay will gain a foothold in one of the world’s fastest growing Internet markets.
EachNet was founded in Shanghai in August, 1999 by two United States-educated Chinese entrepreneurs, Bo Shao and Haiyin Tan. Inspired by the potential of the Internet to make commerce more efficient, they created EachNet to bring person-to-person trading to China. Today, EachNet has 3.5 million registered users who trade a wide variety of items from clothing and antique calligraphy to computers and real estate.
“Our relationship with EachNet is an important step forward in eBay’s strategy to build a truly global marketplace,” said Meg Whitman, President and CEO of eBay Inc. “Over the next three to four years, China’s e-commerce revenue is projected to grow nearly twelvefold to more than $16 billion. Together with EachNet, eBay will be well positioned to help develop this emerging market and benefit from its growth long term.”
China has more than 27 million consumers online, making it the world’s fifth largest Internet population behind the United States, Japan, Germany and the United Kingdom. China is the fourth largest e-commerce market in Asia and eleventh in the world, and its online commerce is expected to nearly double every year for the next four years.*
“This alliance is an endorsement not only of EachNet’s leadership position, but also the enormous potential of e-commerce in China,” said Bo Shao, Chairman and CEO of EachNet. “Our local expertise combined with eBay’s global know-how will allow us to continue to grow our business and provide our community of users with more and better trading opportunities. We believe online trading will revolutionize how people buy and sell goods and services in China.”
In conjunction with its investment, eBay will receive the right to expand its ownership at a later date. Meg Whitman and Matt Bannick, eBay Senior Vice President, International, will join EachNet’s Board of Directors, which will also include Bo Shao, Yichen Zhang, Executive Director of CITIC Pacific Limited, and Carlos Bhola, President of Vonage.
eBay will account for the investment using the equity method. Accordingly, the agreement will have no material impact on net revenues or operating expenses and the transaction is not expected to have a significant impact on eBay’s 2002 net income, on either a US GAAP or pro forma basis.
EachNet is the leading online trading community in China, allowing its community of users to transcend the geographic and structural limitations of traditional commerce in China. EachNet’s 3.5 million registered individuals and businesses buy and sell a wide range of items across China, in both auction and fixed price formats. EachNet was founded by Bo Shao and Haiyin Tan in 1999 and its early investors included Whitney & Co., AsiaTech Ventures Limited and Orchid Asia Holdings.
eBay is the world’s online marketplaceTM. Founded in 1995, eBay created a powerful platform for the sale of goods and services by a passionate community of individuals and businesses. On any given day, there are millions of items across thousands of categories for sale on eBay. eBay enables trade on a local, national and international basis with customized sites in markets around the world.
Forward Looking Statement This announcement contains forward-looking statements that involve risks and uncertainties. Actual results could differ materially from those discussed. Factors that could cause or contribute to such differences include, but are not limited to, the reaction of the users and suppliers of EachNet to the transaction, the future growth of EachNet’s services, the reaction of competitors to the transaction, and the evaluation of the regulatory environment in China. Factors related to international expansion that could cause or contribute to such differences include, but are not limited to, foreign currency exchange rate fluctuation, and regulatory, political and economic conditions in China and other areas of Asia. More information about potential factors which could affect the company’s business and financial results is included in the company’s Annual Report on Form 10-K for the year ended December 31, 2000, and the company’s Quarterly Reports on Form 10-Q for the periods ended March 31, 2001, June 30, 2001 and September 30, 2001. All forward-looking statements are based on information available to eBay and EachNet on the date hereof, and neither company assumes any obligation to update such statements.
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