PayPal Inc. is ending its relationship with a unit of the Chinese e-commerce giant Alibaba Group Ltd., the eBay Inc. subsidiary said June 3 in a blog post.
After Aug. 3, PayPal no longer will be a payment option for shoppers of AliExpress, a wholesale shopping site that is part of Alibaba.com. The companies began working together last year as part of PayPal’s efforts to grow internationally (
PayPal made the decision to end the relationship “following a routine annual business review,” Dickson Seow, a spokesperson for PayPal Asia Pacific, wrote on the San Jose, Calif.-based company’s blog. “We have valued the opportunity to work with AliExpress over the past year and wish them well.”
Seow did not give a reason for the decision, but Reuters, citing a document it obtained, reported May 27 that PayPal was unhappy with growing amount of consumer payments on AliExpress, which is intended for businesses, and wanted to raise transaction fees.
The Chinese market has been difficult for foreign payments companies to operate in because of the country’s ownership regulations that favor domestic firms.
Yahoo Inc. faced investor criticism recently over its 43% stake in Alibaba after the search-engine giant disclosed that Alibaba had transferred ownership of a key payments subsidiary, Alipay, to an outside entity to meet Chinese licensing requirements (
PayPal’s total payment volume in China was $4.4 billion in 2010, up 44% from a year earlier, according to Seow.
During an investment conference May 26, John Donahoe, eBay CEO and president, said cross-border business stemming from China remains important, but operating within the country is difficult.
“The simple fact is no global Internet company has had any success in China, … and I don’t see that changing in the short term,” Donahoe said, adding the Chinese government “would prefer local companies winning domestic payments and commerce.”
