Online auctioneer eBay Inc. is it is winning back share from rival Alibaba in the fast-growing China market, following its recent elimination of many fees, eBay’s China chief said on Thursday.

U.S.-based eBay has spent much of the last two years fending off advances in China from Alibaba, the company backed by Internet giant Yahoo Inc. (YHOO.O: Quote, Profile, Research), which offers online auction services for free.

EBay entered the market earlier, also as a free auction service, but later added fees. It has said before that “free is not a business model.”

But last year it quietly began eliminating a number of its fees, including basic charges for setting up stores, and commissions for the completion of some sales, Martin Wu, the company’s China chief executive, told Reuters.

Sellers on the service can essentially avoid three of the four types of fees that the company charges, with only a listing fee of around 0.30 yuan (3.7 U.S. cents) or more mandatory, he said.

“The strategy has paid off,” he said at the Reuters Global Technology, Media and Telecoms Summit. “Our fourth quarter grew dramatically. The first quarter is very healthy. … We believe we’re gaining market share here.”

In the fourth quarter, TaoBao, the Alibaba service that competes directly with eBay, added 3.9 million users compared with an increase of 2.8 million by eBay.

The U.S. online giant has 19 million users at the end of January in the fast growing Chinese economy, up 85 percent from last year, Wu said.

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Posted: 03|3|06 at 10:39 am. Filed under: Auction News.