Ebay's Strategy in China Case Study

EBay’s venture with Tom Online will allow eBay to enter the Chinese market through a rapidly growing market. In 2007, China is experiencing a technology boom where more people are using the internet than ever before. Since more people are using the internet in China, this also means that E-Commerce is growing as well. With the power and influence of Tom Online, eBay has a unique opportunity to tap into a market of a billion people.
There are many benefits for eBay to partner with Tom Online in China. Tom Online will help eBay reach millions of people through internet use or the use of mobile internet. As seen in Appendix A, China’s internet usage is growing exponentially. In just four years, the internet usage grew from 80 million users to 205 million users. In a country with over a billion people, internet usage growth is almost a guarantee. Appendix B shows the projected rate of growth in internet usage, assuming a seven year average growth rate. In just three years, China could have over half a billion internet users. As internet usage is growing in China, so is the online shopping. Appendix C shows that there are currently 55 million online shoppers in China, and assuming the current growth, Appendix D shows the potential of over 250 million in just three years. The current growth rates mean that China is the perfect market for eBay to tap into. Tom Online is a top five internet portal in China, while providing mobile services as well. Tom EachNet has the potential to be extremely successful if managed correctly. The potential is reason enough for eBay to do business with Tom Online.
While there is much potential for Tom EachNet to be successful, eBay must pay close attention to Tom Online and their strategy in the market. Tom Online has the majority share in Tom EachNet at 51%. EBay has injected over $40 million into Tom EachNet, while Tom Online is only contributing $20 million (along with knowledge, technology, and brand value). It is clear that eBay has more to lose in the deal, while Tom Online is simply negotiating their presence in China. EBay must work closely with Tom Online to ensure that their visions for Tom EachNet are similar, and a common strategy is taken to succeed. China’s business culture is another obstacle that eBay must monitor closely. Tom Online does have extremely well connected resources in the Chinese government, and eBay must be sure to take advantage of the connections that Tom Online can provide.

Appendix A

Appendix B

Appendix C

Appendix D