Chinese search engine (BIDU) and online auction website eBay (EBAY) EachNet are collaborating in China.

Their new multi-year agreement is focused on three areas of enhanced cooperation: Baidu will promote PayPal Beibao, PayPal's service in China, as the preferred online payment method on Baidu. In return, Baidu will
become the exclusive provider of text-based search advertising on eBay EachNet, eBay's China subsidiary and a leading e-commerce company in China. Additionally, eBay EachNet and Baidu will develop a co-branded toolbar designed to leverage each other's expertise in online protection.

eBay Eachnet has seen fierce competition from domestic rivals. Alibaba's currently commands more than 50% of the Chinese auction sector, and eBay Eachnet has much ground to cover to enhance its presence in China.

In a prepared statement, the companies also said they do not expect this agreement to have a material impact on their respective financial results during the period of the service agreement. Whether this means they both do not expect the agreement to generate a large revenue stream or if they just believe the future to be opaque is still unclear.

"eBay EachNet has worked closely with Baidu since 2000, and we are very pleased to continue and further develop this long-standing relationship," said Jeff Liao, CEO of eBay EachNet. "As the leading search advertising platform in China, Baidu offers a dynamic online audience and drives significant traffic through its search service and other community channels to our site. We are excited to work together on new ways to better serve users, merchants and online advertisers in China."

The two companies plan to begin testing the text-based search advertising on eBay EachNet in the first quarter of 2007 and expect to have the full implementation in place during the second quarter of 2007.

Baidu will add PayPal Beibao to its paid search channel as the preferred online payment service provider. Baidu will also promote PayPal Beibao's payment service as the preferred third-party payment solution on the Baidu Points platform. Baidu will also encourage its small and medium-sized merchants to use PayPal Beibao as their online payments processor.

Baidu will also become the exclusive provider of text-based advertising on eBay EachNet. This agreement provides Baidu advertisers with access to one of the most robust online communities in China while enhancing the shopping experience for eBay EachNet buyers by making it easier to find the products they seek. eBay EachNet and Baidu have also agreed to work together more closely to better optimize eBay EachNet pages for Baidu's natural search engine.

Baidu and eBay EachNet plan to integrate their respective toolbar features. The co-branded toolbar will allow users to click on an eBay EachNet icon directly from the Baidu toolbar menu and be immediately directed to the eBay EachNet homepage.


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