eBay to Shut Chinese Auction Site

Online auction giant eBay(EBAY Quote) is planning to close its main Web site in China, according to The Wall Street Journal's online edition reported on Monday afternoon.

The move, which will be announced as soon as Tuesday, will entail eBay's replacing its site with one run by Chinese firm Tom Group(TOMO Quote), the paper reported, citing people familiar with the matter.

Under the new arrangement, eBay will hold a 49% stake in the new site with Tom Group holding a 51% share. eBay does not plan to lay off any employees as part of the new setup.

The move could be read as a setback for eBay, which has struggled to stay in place in the face of intensifying competition in China. "We believe we're actually maintaining share in what is becoming an even more competitive market," said eBay CEO Meg Whitman during the company's third quarter conference call. "There are many new entrants in the business, but we feel pretty good about where we are."

Whitman said at the time that eBay was committed to China in the long-term, but refused to discuss whether the company would consider partnering with a local Chinese company as part of its future strategy.

Still, eBay's China site totals less than 3% of its overall listings, according to a Deutsche Bank figure noted in the Journal report.