HONG KONG: Alibaba Group Holding Ltd's Taobao unit, the biggest online-commerce site for consumers based on the mainland, may more than double its revenue this year from about 400 million yuan ($58.6 million) in 2008, said its President Jonathan Lu.

"Our advertising sales are increasing and the company is also getting more income from commissions," Lu said in an interview in the eastern mainland city of Hangzhou, where Alibaba is based. Taobao may double its number of employees in two to three years from about 2,800 workers now, he said. Parent Alibaba Group is 39 percent owned by Yahoo! Inc.

Taobao, which doesn't charge individual users fees on transactions, posted its first profit before interest, tax, depreciation and amortization last year as sales of advertising on its website surged. Alibaba Group Chief Financial Officer Joseph Tsai predicted earlier this year that Taobao would challenge Baidu Inc as the country's biggest seller of Web ads.

Alibaba last year said it would invest 5 billion yuan ($732 million) in Taobao over five years to add functions and services. Taobao was established in 2003 and in less than three years overtook eBay Inc's mainland unit to become the market-leader by keeping services free.

Ads currently account for about 70 percent of revenue, with commissions on transactions at its retail site that offers products from Dell Inc and Fast Retailing Co and other value-added services making up the remainder, Lu said.

Taobao had 86.8 percent of the mainland's consumer-to-consumer online commerce market in the second quarter, compared with 7.9 percent for second-ranked Paipai, a division of Tencent Holdings Ltd, according to researcher Analysys International.

The website had almost 145 million registered users at the end of June, who purchased 80.9 billion yuan of goods during the first half, according to Alibaba.

Ma sold about 5 percent of his holding in Alibaba after the stock almost quadrupled this year, making it the sixth-best performing member in the MSCI AC Asia ex-Japan Information Technology Index. The 44-year-old executive controls the Hangzhou, Zhejiang-based company and several Internet businesses including Yahoo! Inc's mainland website.

"There was some profit-taking by some investors today, following the share sale," said Li Lixing, who rates Alibaba shares "hold" at Tai Fook Securities in Hong Kong. "In the long term, I don't think there will be a big impact as the company is doing quite well," Li added.

Ma sold 13 million Alibaba shares at an average price of HK$21 each, according to a sales document. Connie Ling, a Hong Kong spokeswoman at Goldman Sachs Group Inc, the sale's arranger, declined to comment.

China Daily - Agencies

(HK Edition 09/12/2009 page2)