Shares in US online auction giant eBay fell in China over the past year as its competitor Taobao.com claimed more of the country's online trading market, according to a China Internet Network Information Centre (CNNIC) report released yesterday.

CNNIC said in the report that eBay Eachnet, the Chinese arm of the US firm, took almost 30 per cent of the market share in Shanghai, Beijing and Guangzhou, while its local competitor Taobao, partly held by Yahoo!, grabbed two thirds of the pie, based on the number of active registered traders and the frequency of their transactions last year.

Paipai.com, under the largest Chinese instant messaging service provider Tencent.com, had a market share of 2.2 per cent with the strongest growth, while 1pai.com, a former joint venture between Yahoo! and a Chinese counterpart and now part of Taobao, took only 1.4 per cent.

CNNIC, a semi-official organization, monitors Internet traffic and releases half-yearly reports on the development of the Web in China; this is the first time it has released a report on the consumer-to-consumer (C2C) e-commerce market.

Although buyers in the three cities accounted for less than 20 per cent of the total in the country, they bought almost 40 per cent of goods. Sellers in these cities sold around half of the goods, despite the fact that they accounted for fewer than a third of the country's total traders.

The report said more than 2 million people in the three cities traded on C2C websites last year. And almost 20 per cent of all Internet users in Shanghai bought or sold goods on C2C websites, while the ratios in Beijing and Guangzhou were 17.5 per cent and 11.5 per cent.

"The shift of the leadership from eBay Eachnet to Taobao took place mainly in 2005," said Peter Lu, senior consultant with CNNIC.

According to the report, half of the traders on Taobao registered last year and 64 per cent of sellers and 56 per cent of buyers trading both on Taobao and eBay Eachnet were registered with eBay Eachnet in 2004 before they migrated to Taobao.

Ebay Eachnet has experienced slower growth compared to its rivals due to increased competition, its service charges, lack of online chat software before 2005 and slower log-on speed.

Over 60 per cent of survey respondents said they would buy more frequently on Taobao, while almost 40 per cent preferred eBay Eachnet, according to the report. Two thirds of respondents said they would recommend trading on C2C websites to their friends and relatives.

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