Alibaba.com has agreed to buy a strategic stake in a local classified listing site, the e-commerce firm said yesterday, as it jockeys with eBay to cash in on the world's second-largest Internet market.

Alibaba did not disclose the financial terms of the investment in Koubei.com, which it described in a statement as one of China's largest classified listing and community Web sites with more than 2 million registered users.

Koubei, which means "word of mouth" in Chinese, was founded in Hangzhou in mid-2004 and hosts ads and discussion forums for several cities in China in a similar arrangement to popular U.S. networking site Craigslist, which is 25 percent owned by eBay.

"Craigslist has really moved classified advertising from newspapers to online, and in China that market is still at the early stages, but it's an important part of e-commerce to our overall portfolio," Porter Erisman, Alibaba's vice president of international marketing, said.

Koubei's classified listing format would complement Alibaba's existing online payments unit, Alipay, and consumer-to-consumer e-commerce site, Taobao.com, Erisman said, but he declined to give details on expected revenue or user number growth.

EBay has been locked in a war of words and business models for much of the last two years with Taobao. Taobao, which charges no fees for its services, was taking market share steadily from fee-charging eBay, which said that "free is not a business model."

Purchases through the Internet are much less common in China than in Western markets, one main reason for which is believed to be Chinese consumers' view that online payments can be risky.

Koubei services, like Taobao, will remain free until "a critical mass" is hit, Erisman added, after which point the companies are likely to start charging for their services.

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