More Trouble for eBay in China

Posted by: Rob Hof on September 26, 2006

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?

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Reader Comments

Wayne Conduff

October 16, 2006 08:58 AM

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.

online auctions

February 14, 2007 10:25 PM

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.

ebay should do better

May 24, 2007 10:56 AM

It was no surprise Taobao won the competetion with Ebay in China. Their fee is much lower and their service is just as good if not better than Ebay.

In Europe users are complaining Ebay's charge is way too high. The reason is that there is basicly no competetion to Ebay. I really hope Taobao can expand their business to other countries. That will only benefit the auctioners and buyers.

taobao user

September 8, 2007 03:28 AM

what do you mean Taobao's fee is "lower"... there is NO fee. It is 100% free to the best of my knowledge. Free to list items, no transaction fees, and there is a fantastic feature called "Alipay" that severely decreases the risk of fraud. Basically it's like this, when you win an auction, you pay with your internet banking to Taobaos Alipay service (it's like escrow), the money stays there, and Taobao notifies the seller to ship the item. When the seller does so, he puts the shipping no in the Alipay and changes the status to Shipped. When the buyer receives the item and is satisfied, he goes to Alipay and confirms it, and the money is then sent to the seller.

You may be thinking "well there are still loopholes for thieves to exploit" well that's true... but should a thief send an empty box or something, or a buyer recieves the goods and wrongfully accuses it if being fake. They then report to Taobao who takes a looooong time assessing the case. Meanwhile, the money is frozen in Alipay, while Taobao makes interests off of it (I think that's how they make money). So, obviously such a situation is not good for thieves (they cant get the money, and if they are the buyer, their money is frozen in Alipay).

So, hopefully the Western world can soon enjoy a service like Taobao.

wu chun ge

February 24, 2008 03:14 AM

lol, alipay reli helps taobao a lot on credits winning

Vincent

September 11, 2008 11:20 PM

so alipay relies on the life and death of taobao if they do not charge a fee?

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