EBay Inc. is taking a further step into Asia with its Korean Gmarket brand, which it acquired in June 2009 for $1.2 billion. It has signed a joint venture agreement with Young Bae Ku, the founder of Gmarket, to expand Gmarket’s existing online marketplaces in Japan and Singapore.
EBay says the move will bolster its presence in two growing markets. It forecasts e-commerce in Japan will grow by 30% and in Singapore by 13% between 2009 and 2012.
“EBay’s partnership with Young Bae Ku combines his expertise in Asia and Gmarket’s proven Korean online marketplace model to enhance our long-term position and growth in the region,” says Lorrie Norrington, president of eBay Marketplaces. “This joint venture is a sign of our continued commitment to help grow and lead e-commerce across Asia by offering more opportunities for sellers and extraordinary buying experiences for consumers.”
Ku will be CEO of the new entity. EBay will have a 49% stake in the joint venture, and an undisclosed entity owned by Ku will have a 51% stake. EBay will contribute assets from Gmarket’s existing businesses in Japan and Singapore to the joint venture, and eBay and Ku will each contribute U.S.$10 million to the deal. EBay will allow the venture to license Gmarket’s technology while Ku will manage the business locally.
EBay says the new venture will not affect its existing Korean business, Auction Co.—formerly Internet Auction Co.
“These are tough markets for new entrants, but the joint venture gives eBay an opportunity,” says Colin Sebastian, an analyst with Lazard Capital Markets who covers eBay. “That said, it would likely require substantial time and investment to take meaningful share of e-commerce in these markets.”