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By Alistair Barr
SAN FRANCISCO, June 17 Ebay Inc will
become the first foreign company to secure a financial payments
license in China, CEO John Donahoe predicted, but the retailer
is refraining from competing in the more aggressive and
local-dominated retail sales sector.
Donahoe sees "encouraging signs" from the Chinese
authorities, but said it remained next-to-impossible to guess
when its fast-growing PayPal unit will finally get the green
light to operate in the world's second largest economy, he told
the Reuters Global Technology Summit on Monday. (For a video of
the interview, click on reut.rs/11FgUSQ)
"I am confident that PayPal will be the first non-domestic
company to get a payments license in China. That could be in
three months or five years," said Donahoe.
It is not clear whether PayPal will have to do this through
a joint venture with a domestic company in which it owns a
minority, 49 percent stake, or whether it will be able to own a
majority stake, Donahoe added.
Foreign Internet corporations traditionally operate at a
disadvantage versus locals such as Alibaba and Baidu Inc
in the country, which formally opened to international
business just over a decade ago when it joined the World Trade
Organization. The financial and retail industries remain largely
dominated by domestic companies such as Bank of China and
"The evidence would suggest that a non-Chinese company is at
a disadvantage. We have chosen not to compete aggressively," he
said at the summit, held at the Reuters office in San Francisco.
But "over time you'll see the Chinese domestic economy try
to connect with the global one."
Ebay does around $6 billion of business volume in China
currently, much of it Chinese companies selling to the rest of
the world as homegrown businesses test global markets. Donahoe
expects growth there to continue to outpace the rest of the
Donahoe said eBay was working closely with foreign
governments to combat online fraud and crime, especially
money-laundering. About a quarter of PayPal transactions are
cross-border. While eBay has not experienced state-sponsored
attacks itself, it has noticed a marked increase in such cyber
attacks, generally, in the past 12-to-24 months, he added.
On the recent debate about the extent to which the U.S.
government conducts surveillance within its own borders, Donahoe
said eBay has never been asked to participate in a broad
information-gathering exercise. But he said it does comply with
legitimate requests for data on a case-by-case basis.
Donahoe personally welcomed the debate that has arisen since
news first broke that the National Security Agency is gathering
information from a broad swathe of other Internet companies
through the Prism program.
"It's appropriate for us, to have a bit of a national
dialogue and debate on privacy and on cyber security. And just
so that what sometimes goes unspoken gets spoken," he said.
"We're trying to make sure that all of our privacy policies
and how we comply stand up to the spotlight. As the digital
world becomes more of our everyday lives, there will be more
opportunity and need for more of a dialogue."
Follow Reuters Summits on Twitter @Reuters_Summits
(Additional reporting and writing by Edwin Chan; Editing by
Edward Tobin and Andre Grenon)