eBay's Problems in China


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Case Details:

Case Code : BSTR278
Case Length : 19 Pages
Period : 2002-2007
Pub Date : 2008
Teaching Note :Not Available
Organization : eBay
Themes: Globalization | International Business | Joint Venture
Industry : Internet and E-Commerce
Countries : China

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Please note:

This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Excerpts Contd...

Joint Venture with Tom Online

Sensing the need for local support, eBay entered into a JV with TOM Online in December 2006. Whitman said, "One thing we've learned operating here for three or four years is that actually we're going to be better served by tapping into a local partner who has local knowledge."...

A Strategic Shift?

Many analysts considered eBay's new move indicative of the company's retreat from the Chinese market. Caris and Company analyst, Tim Boyd, said, "It's an admission that they failed in China, on their own at least...

But I think that's something the market already knew."They saw the venture as a bail-out considering that Whitman had aggressively projected China as a key driver for eBay in the future in the face of slackening growth of eBay in the mature markets...

The Aftermath

The new entity started operating with the name 'Tom Yi Qu' (which means Tom eBay) in 2007. Wang Lei Lei (Wang) headed the JV, while Jeff Liao, head of eBay China, was also included in the management...

Outlook

China was well poised to unseat the US as the country with the largest number of Internet users in the first few months of 2008, according to Morgan Stanley. According to Chinese government figures, the number of Internet users in China had reached 210 million in 2007, a growth of 50 percent compared to 2006. Moreover, there was tremendous scope for future growth as the penetration levels were low, with only 16 percent of the population using the Internet. Unlike the US, people aged below 30 years were driving the growth...

Exhibits

Exhibit I: Online Trading Companies in China
Exhibit II: eBay Inc Financial Summary (In Millions of US$)
Exhibit III: Nine Problems in Development of e-commerce in China
Exhibit IV: Reasons for Failure of Foreign Internet Companies in China

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