In the long term,

eBay's

(EBAY) - Get Report

growth may come from emerging markets such as China and India, but it's the near-term growth in markets like Germany that is causing more of a problem right now.

eBay CEO Meg Whitman said last week that the company expects China to become one of its biggest markets in five or 10 years. That would be nice, but this year eBay's marketplace business in China will yield only $400 million, or a little more than 1% of its total gross merchandise value last year.

And investors have this nasty habit of being short-sighted about revenue and profit figures, so for the moment, they're watching Germany much closer than China. eBay's German operations have been a drag on its overall auction and e-commerce business and Whitman and others at eBay have admitted they'd like to see growth rates improve.

eBay's German problem is about more than jump-starting one of its core markets; it's a chance to prove that the company can still manage impressive growth rates, even as it brings in more than $3 billion a year in revenue. Investors and analysts watching eBay have worried that the 10-year-old company has hit middle age already. eBay's estimated 2005 EPS is 45 times its price -- a valuation that isn't bad for a company growing at a healthy rate, but a rich one for a mature company.

Germany accounted for 22% of the total value of goods sold through eBay's marketplace last year, second only to the U.S. in size, but its revenue growth rates have been lower than most of the company's other markets. In the first quarter of 2005, eBay's Germany revenue grew 24%, but factoring out the purchase of automobile marketplace site mobile.de, revenue grew 16%. That was less than a third as fast as the 51% growth rate of eBay's international marketplace revenue.

A year before, in the first quarter of 2004, eBay's international marketplace revenue was growing at an 87% rate. So, growth at its international markets are slowing despite successful launches in countries like France, the U.K. and Italy. About half of eBay's European revenue comes from Germany.

In the past two quarters, analysts have hammered on the relatively slow growth in Germany. eBay executives were quick to respond by focusing on initiatives to spur growth and carve out a bigger piece of the e-commerce market there.

Addressing analysts, Whitman has said that eBay has "considered things like loyalty points, we have considered things like education, we have focused on direct marketing and site merchandising and we're going to pull those levers."

More recently, eBay has pushed cross-promotions with mobile.de. In April, the company introduced a site tailored to businesses in Germany. "It's going to take some time before those initiatives start to take effect," says eBay spokesman Hani Durzy.

How is Germany doing this quarter? eBay, of course, won't give out information on revenue, but many analysts track listings on its sites around the world to get a sense of how things are going. Halfway through the second quarter, reports are mixed, but there aren't yet clear signs that eBay's efforts are taking root.

Deutsche Bank analyst Jeetil Patel estimates that eBay Germany's listings are up 9% so far in the second quarter, including a strong promotion eBay offered in early May. He estimates listings for the full quarter will be "flat to modestly down" from last year. Deutsche Bank has an underwriting relationship with eBay.

Prudential analyst Mark Rowen says German listings grew a more modest 1.8% so far this quarter. And he notes that the rate was substantially slower than the 20.8% rise in U.S. listings, where eBay also staged a promotional effort, or the 117.7% surge in U.K. listings. Prudential does not have an underwriting relationship with eBay.

The relatively slow growth rates of eBay's Germany operations may indicate that the unit is ailing, but that's not quite the case. While some analysts attribute a small part of the slowdown to Germany's sluggish economy, the biggest factor is that eBay Germany is a victim of its own early success.

German Internet users took to eBay faster than people in other countries where eBay has a sizable business. After 16 months, the gross merchandise value of eBay Germany was nearly $15 billion, or more than twice as large as eBay's U.S. operations were at a comparable point in its history. eBay has been voted the top brand in Germany for five straight years, so it's not as if people are dissatisfied with the company.

And even with its slower growth rate, eBay's German customers buy and sell relatively more than those in its biggest market, the U.S. Last year, the amount of goods traded on eBay was equal to $93 per capita in Germany, well above the $61 figure for the U.S.

Hellen Omwando, an analyst at Forrester Research, says price-conscious German shoppers have helped drive eBay's success. "Twice as many online German shoppers as online U.K. shoppers buy from online auctions."

So, Germans still love eBay, but that makes it all the more puzzling that listings and trading continue to grow at a slower rate than one would expect. eBay often says there's still a lot of room to grow in Germany. Its efforts to make that happen sooner or later could pick up steam in coming quarters, but how long investors are willing to wait for results is another question.