China is frequently predicted to become the largest online market in the world within a few years. The growth of China ‘s computer users is however hampered by low personal incomes that lead to low personal spending. Despite an average income in the cities of about $1,000 a year China has over 100 million Internet users. Only the United States has more.Online commerce in China is estimated at about $1.5 billion a year and is getting bigger all the time. It has been estimated that China ‘s online commerce will nearly double over the next few years.While ecommerce and Communism may seem an odd mix you’d never know it from the flurry of investments in China by American Internet companies. In the most recent example of the Asian spending frenzy search engine giant Yahoo is paying $1 billion for China ‘s biggest online company, Alibaba.com. There are certainly experts who believe that $1 billion is far too high a price tag for a company that made $68 million last year. Wise or not, this will give the Yahoo a far bigger presence in the world’s second biggest Internet market and they obviously believe that Alibaba will grow remarkably.This merger is just one example of the fervor with which American companies are trying to get into the Chinese web market. China ‘s biggest search engine Baidu.com very recently made its initial stock offering and its shares rose 350% in the first day of trading. Google owns just under 3% of Baidu and has expanded its advertising presence there by making deals with companies to resell their ads.Yahoo’s existing Chinese subsidiary will merge with the new acquisition. Last year Yahoo began paving the way for the new venture by acquiring 3721.com, a Chinese language search engine for $120 million. Alibaba operates an auction site calledTaobao.com that already competes with the auction site operated by Ebay and specializes in hooking foreign merchants up with Chinese wholesalers. Companies pay from $5,000 to $10,000 per year for membership in its commercial online auctions. The Chinese auction site doesn’t charge fees for individual listings the way Ebay does. The new arrangement with Ebay is unlikely to change that policy.In 2003 Ebay paid $180 for the Chinese auction site Eachnet and has been growing in the Asian market ever since. Last month Ebay added a vital element to their success in China with the launch of Paypal in the country. Ebay’s payment provider has merged with China Pay an existing cross-bank payment system. This addition is expected to greatly improve the payment systems available in China , which historically have been unreliable and slow.However, this new deal between Alibaba and Yahoo seriously threatens Ebay’s hope of dominance in the Far East . Yahoo’s auction site already has the lead in Japan as well as a significant share of other Asian markets and now hopes to take the Chinese market as well. The new partnership will offer a full range of online businesses including email, searches, as well as the auction site.They have a long way to go however. Ebay controls about 65% of the Chinese auction market while Taobao commands about 29%. Ebay claims to fear nothing. Ebay spokesman Hani Durzy has said they will not alter their plans in response to Yahoo’s move and it will be “business as usual”. Ebay certainly must have big plans for China since they intend to invest $100 million this year to improve their web presence there.What will all this mean for American Ebay and Yahoo Auctions merchants, probably not very much. The most likely benefit that American sellers might enjoy is improved access to Chinese suppliers. It is possible that we may see more imported inexpensive merchandise on the sites particularly in wholesale lots and ‘business to business’ categories. The appearance of even more products manufactured in the oppressive conditions of China may well be bad news for many American manufactures the small retailer could benefit from the changes.Art Mickelwraith is the author of the Wholesale Buyer’s Guide at TopTenWholesale.com. He can be reached at artmicklewraith@gmail.com.