Why does E-bay have problems in its Asian markets? After conducting some research on this subject I have learned that China is a very fast-growing and frustratingly tough to crack market, that is why E-bay has been forced to shut down its main Web site in China and enter into a joint venture with a Chinese company instead.
E-bay has taken a 49 % stake in the venture with Tom Online Inc. Tom Online Inc is based in Beijing and is currently taking the majority share and administering the venture, which has yet to be named. The agreement was that E-bay would put up $40 million into the venture and Tom Online to contribute $20 million. The Chief Executive of E-bay (Meg Whitman) had formally made the announcement in an E-bay office in Shanghai. EBay has already invested hundreds of millions of dollars trying to establish its presence in China. After reading what Tim Boyd (an analyst with Caris and Company) article it was no surprise that E-bay has been failing in China.
China has not been easy territory for E-bay. The company established itself in China as early as 2002, when it pulled out of Japan in a concession to Yahoo’s sizable lead, and bought a third of Eachnet.com principal online auction site. The Following year, E-bay acquired the rest of Eachnet.com, bringing the total price to $180 million. In 2005, eBay spent another $100 million on marketing in China.
Ms. Whitman predicted in 2002 that within four years, e-commerce revenue from all sources in China would grow nearly twelve folds, to more than $16 billion. I believe that her predictions were on the mark, but the problem has not been the growth in e-commerce in China. The problem has been that E-bay is losing market share’s.” E-bay has steadily been lagging behind Taobao, the consumer au ...