14 DAY TRIAL // eBay has announced that it has signed a partnership with the Chongqing, China municipal government in which its subsidiary PayPal will work with the local authorities to provide support and services to small businesses doing international transactions. The joint venture will provide services like foreign exchange settlement, telesales, merchant training and verification center for PayPal.
"We are excited to partner with the Chongqing municipal government to grow ecommerce and support cross-border trade for all Chinese merchants," Chris Yao, PayPal's VP of Greater China said.
"We know that overseas buyers shop online for great deals and a wide range of products - exactly what millions of Chinese merchants can provide via international ecommerce. Our goal is to unleash the full potential of Chinese small businesses and entrepreneurs to sell to the world," he added.
In total, five ecommerce centers will be set up to help local businesses sell their services overseas. Currently, individuals are only allowed to convert up to $50,000 worth of foreign currencies into the local yuan.
One way the new centers will help entrepreneurs is to enable them to apply and receive an export license which will allow them to convert more payments.
The move is a strategic one for eBay which hasn't fared well in China. It launched a local version of its auctions site in 2002 only to shut it down in 2006 after it was more or less driven out by the local Taobao, owned by Alibaba.
Alibaba runs China's biggest business-to-business online commerce site Alibaba.com and it has been looking to expand internationally. Specifically, it plans to make it easier for Chinese businesses to sell their wares in the US.
This is precisely what eBay wants to do with its new PayPal venture. Partnering with the local government could give a more solid base to build a business, but there are still no guarantees that eBay will prevail this time around.
PayPal has been the main driver for eBay's growth for the past few years but even the ubiquitous payments system is feeling the pressure from younger players and new markets. Expanding into a market like China could add quite a bit to the bottom line, but navigating the Asian market has proven difficult for many foreign companies.