Ebay boss confident of getting China payments licence

Ebay will become the first foreign company to secure a financial payments licence in China, chief executive 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.

“I am confident that PayPal will be the first non-domestic company to get a payments licence 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 per cent 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 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 Alibaba.

“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.