eBay's Problems in China
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Case Code: BSTR278 Case Length: 19 Pages Period: 2002-2007 Pub Date: 2008 Teaching Note: Not Available |
Price: Rs.300 Organization: eBay Industry: Internet and E-Commerce Countries: China Themes: Globalization, International Business, Joint Venture |
Abstract Case Intro 1 Case Intro 2 Excerpts
"We do not anticipate fading from China, we are very committed to the China market and we think the China market is going to be a very big market for m-commerce (mobile commerce) as well as e-commerce."
- Meg Whitman, President and CEO, eBay Inc, in 2006.
"I think it's a question of recognizing that they were not achieving what they were hoping to, and finding a solution that offers them a better opportunity for the long term…. I think it's an indication of how complex and difficult China is. In most of the other countries where eBay has expanded, those have been pretty mature and stable economies. China is neither."
- Patti Freeman Evans, Analyst, JupiterResearch, in 2006.
eBay Changes its Strategy in China
On December 20, 2006, eBay EachNet entered into a Joint Venture (JV) with TOM Online Inc. (TOM Online) to form TOM eBay. The JV was set up to explore opportunities for the growth of e-commerce and m-commerce in the highly competitive Chinese market. This marked a change in eBay's strategy in China as its Chinese site had failed to live up to expectations. However, Meg Whitman (Whitman), President and CEO, eBay, refused to admit defeat and said that the JV was an evolution of their strategy in China and that it would help them foster growth in the Chinese e-commerce market.
In 2002, eBay entered China by acquiring EachNet, a leading auction site in China, to form eBay EachNet. Till 2005, eBay EachNet was the market leader in the Chinese e-commerce market, controlling more than half of the market (Refer to Exhibit I for online trading companies in China). But eBay EachNet soon lost its market leadership position to Taobao.com (Taobao). Some analysts opined that this was because of eBay's failure to localize its globally successful business model to China. Also, Chinese customers preferred Alipay as it was perceived to be safer than other payment systems such as PayPal. Another factor for Taobao's success was that it did not charge any transaction fee from sellers on the website while eBay had listing fees for its sellers...
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