Is eBay Losing China?

According to Shanghai Daily eBay is dropping its fee for online stores, matching competitor Taobao.com‘s free offering. Says the article:

Now why would eBay China do this?

According to the article, eBay China is hosting just 10,000 cyber stores as of the end of Q3 compared to 1 million hosted by Taobao.com. eBay was missing the mark when it thought that small business owners would shell out US$62/month to host a store when other small business owners weren’t paying a dime.

Could Taobao be doing to eBay in China what Yahoo! did to eBay in Japan? To eBay’s credit, it has registered a few million more individual users than Taobao, so it’s way too early to make any clear predictions. Although this sudden change in business model is not a sign of strength, it is a sign that eBay isn’t going to go without a fight.