EBay’s problems in the Asian Markets
Table of Contents
Pg. 3 Introduction
Pg. 3 The Mistakes They Made
Pg. 6 Conclusion
Pg. 7 References
For this case assignment, it was asked “Why does eBay have problems in its Asian Markets?” I can answer this question with one word, trust. EBay didn’t first attempt to gain the Chinese customers trust, when the realized their mistakes, it was too late.
The Mistakes they made
After struggling to establish a standalone presence in China, eBay announced on December 20, 2006, that it will set up a joint venture with politically well-connected Tom Online, a wireless Internet company with value-added multimedia services in China. Despite eBay's attempts to put a positive spin on the report, most analysts view eBay's deal with Tom Online as yet another failure of a foreign Internet company coming to China and losing ground to local rivals.
When eBay came to China in 2003 through its acquisition of Eachnet, many analysts thought that eBay's China operation would be a slam-dunk. After all, even though eBay had failed in Japan, it had completely dominated the online auction market in the United States and should have learned from its mistakes in applying its American model to an Asian country. The Eachnet management team had staked out a commanding lead in the online auction sector, controlling nearly 80% of the market. They had strong international and domestic experience and were close to their customers.
By the end of 2006, however, eBay had invested $300 million into its China operations and had little to show for the effort. Its market share had declined steadily each year until it reached a sparse 20% in 2006 as it lost ground to competitors Alibaba's Taobao and Tencent's Paipai. Former Eachnet executives left eBay in droves after the acquisition.
Unlike competitor Taobao, which offers free basic services to sellers, eBay initially charged listing fees, as it...