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More Trouble for eBay in China


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September 26, 2006

More Trouble for eBay in China

Rob Hof

The departure last week of Martin Wu, head of eBay Eachnet, eBay's site in China, has some news outlets there reporting that the online marketplace is exiting the market entirely and selling out to Hong Kong billionaire Li Ka-shing's Tom Group. Jeff Liao, head of the China operation of eBay's payment unit, PayPal, will take over, heading both operations. eBay said it expects to gain efficiencies from the move, which is of course code for potential layoffs.

eBay won't comment on the "rumors," even to deny them. But given that eBay invested upwards of $100 million in China last year to fight fast-rising Alibaba's Taobao.com, a complete exit would be surprising. Indeed, Citigroup analyst Mark Mahaney notes that eBay may need to do an alliance with a local company to avoid losing more ground. Last year, Yahoo! paid $1 billion for a 40% stake in Alibaba.

Update: Now Pacific Epoch reports that eBay may be talking with Chinese community site Tencent--either to buy Tencent or to sell eBay's China operations to it. Pretty wide range of possibilities, no?

12:56 PM

PayPal, e-commerce, eBay

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Maybe an outcome of this manuevering will be to wake up Americans to the motives of the Chinese. A huge marketplace indeed! BUT at what costs? A chinese engineer I hired, while personally doing business in china, stated quite clearly the national motive for China's open invitation for foreignors to do business there. Due to China's culture they are great mimickers but lack the ability to mentally conjur up fresh ideas. Anyone doing business with China will be received with open arms, at least, until the chinese involved have a greater understanding of your business concepts. They will then go duplicate the process and you will be looking for new business in a culture hard to "crack." The inability for the chinese to come up with new innovative ideas is not a bad thing. An astute entrepruenuer could develop the new ideas then take them to the chinese market with the intent of selling out to the locals much like the scenario unfolding in Rob Hof's brief.

Another result should be a slow down of the chinese SPAM I currently received in my eBay account's message box.

Posted by: Wayne Conduff at October 16, 2006 08:58 AM

It looks like that there are some totally different rules that exist in Asian market. Obviously, Asians are not responding to eBay compared to some local companies. They most likely prefer sites that are founded and hosted domestically.

Posted by: online auctions at February 14, 2007 10:25 PM


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