Why Ebay Failed in China
A report on Ebay and Taobao.
Ebay v/s Taobao
Critically evaluate eBay’s chosen market entry strategies, into the Chinese ‘C2C’ market, determining the shortcomings of the strategies deployed during the case study period.
When entering into a new market, there are many aspects that must be considered in order for a company to be successful. Through this case study we will look at how eBay developed their market strategy using the concept of six key factors timing, location, marketing, HRM, logistics and ownership (Peng & Meyer, 2011) and obtain results on how the company fell apart into the China’s C2C market.
EBay entered into Chinese market via acquisition of EachNet, a Chinese online auction established in 1999 by Chinese entrepreneurs Tan Haiyin and Shao Yibo. It acquired one -third of EachNet’s shares, in 2002 by investing $30 million. The other investment of $150 million for the other two-thirds was made in a year later. In total, eBay spent $180 million for buying EachNet (McGregor, 2003:29) equivalent to 225 million RMB. This acquisition was named as Brownfield Investment and all the decision making at eBay China was centralized to eBay headquarters in the U.S. which turned the table for Ebay in the Chinese market as this led to change of one of the factors mentioned as ownership and also a new COO was appointed with german origin and resignment of Shao Yibo came as mistrust for the people towards the company. Although eBay’s market entry strategies such as joint ventures, licensing, and acquisition are very effective and made eBay successful in global market and become the world’s largest online market place, the situation in Chinese market was totally different. EBay was popular and had a very good reputation in the U.S. and international market, but Chinese people did not know much about eBay. Even though it was still a very effective strategy of eBay to enter Chinese market via acquisition and it should have followed the policy of
Ebay v/s Taobao
Critically evaluate eBay’s chosen market entry strategies, into the Chinese ‘C2C’ market, determining the shortcomings of the strategies deployed during the case study period.
When entering into a new market, there are many aspects that must be considered in order for a company to be successful. Through this case study we will look at how eBay developed their market strategy using the concept of six key factors timing, location, marketing, HRM, logistics and ownership (Peng & Meyer, 2011) and obtain results on how the company fell apart into the China’s C2C market.
EBay entered into Chinese market via acquisition of EachNet, a Chinese online auction established in 1999 by Chinese entrepreneurs Tan Haiyin and Shao Yibo. It acquired one -third of EachNet’s shares, in 2002 by investing $30 million. The other investment of $150 million for the other two-thirds was made in a year later. In total, eBay spent $180 million for buying EachNet (McGregor, 2003:29) equivalent to 225 million RMB. This acquisition was named as Brownfield Investment and all the decision making at eBay China was centralized to eBay headquarters in the U.S. which turned the table for Ebay in the Chinese market as this led to change of one of the factors mentioned as ownership and also a new COO was appointed with german origin and resignment of Shao Yibo came as mistrust for the people towards the company. Although eBay’s market entry strategies such as joint ventures, licensing, and acquisition are very effective and made eBay successful in global market and become the world’s largest online market place, the situation in Chinese market was totally different. EBay was popular and had a very good reputation in the U.S. and international market, but Chinese people did not know much about eBay. Even though it was still a very effective strategy of eBay to enter Chinese market via acquisition and it should have followed the policy of
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