eBay's China Challenge

Posted by: Rob Hof on December 19, 2006

Why can’t U.S. Web companies make it in China on their own? Assuming the reports are true, it looks like eBay will soon be joining a number of U.S. firms that have offloaded their China Internet investments to local partners. As had been rumored for some time, the new reports have eBay teaming with Tom Online. It would be quite a switch, given that CEO Meg Whitman spent some $100 million last year on the site, only to lose ground to Alibaba, Yahoo’s partner in China. (Not that Alibaba is without its troubles, either.) (Update: Corrected story link.)

What happened? There are some interesting (if unconfirmed) little hints at this Chinese blog. The gist clearly is that eBay didn’t understand the market in China, despite buying a Chinese company and trying a number of strategies. Whatever the reason, this can’t be a great development for eBay. Given CEO Meg Whitman’s evident determination that last couple of years to make a go of it in China—coupled with eBay’s exit from Japan years ago and its challenges in Korea—this has to be a bitter pill to swallow. And with China’s Internet population set to exceed the United States’ before long, it’s a setback for eBay’s long-term growth potential.

Update: Done deal.

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Reader Comments

Nikolay

December 28, 2006 08:08 PM

#

Actually I will take a bit different take. Chinese Internet users do use Google as well — I have observed my co-workers in the office (in our office in Beijing) use Google for English language related searches, article from western publications searches etc. and then they tend to use Baidu for more local news or local article searches. So in a way they are using the best of both worlds. Then of course there are issues with what breaks are put on Google with regard to operations in China. That makes their work a bit tough as well.

Pete

October 3, 2007 01:23 PM

Lol...i laugh in Ebays face and if given the chance i would give them i piece of my mind.
Ebay/Paypal is all big and bad in the rest of the world and now they taste the painful back fire total based on their greed. I'd wish they would of invested even more money in China and the entire asia so they could lose alot more than wat has been lost... I am a hater of ebay and Paypal..and yes i use to use them but too much crap and especially Paypal with all those limitation without cause and bad bad customer service. Records shows that these 2 companies has very bad history and has too many law suit etc...Greed greed greed...i read a posting wen ebay just started out and how they basicly beg ppl to sell on there site and the fees were low but look at the greedy giant now...fees fees increase...blah blah blah.
Ebay u can become King in ur country but no here u can't. Taobao and other sites here has 0 fees zippo not fees wat so ever..try to beat that.
Earn wat u can now cause its not going to last forever...Another big reason why u still have customers using ur greedy site is cause their are no other competion and so ppl don't have a choice..but oneday wen sumone smarter and has the money to start up another auction site...u can kiss feebay goodbye and ur nice cushy job meg....or wat ever ur name is.
Wat maybe then u'll drop ya fees or start to beg ppl to reconsider feebay...lol....remember nothings last forever....

Gareth

November 4, 2007 06:59 AM

The reason why so many US companies don't make it in China is because the Chinese government doesn't let them. US websites are frequently blocked or forcefully slowed down, or blocked every 5-10 minutes to make them unusable. It just so happens that EVERY single US website that has been given this treatment has a Chinese copycat version normally with government investment and always with government kickbacks.

These websites were blocked and/or bandwidth throttled on the very day that Chinese copycat websites were launched, chinese copycat website in brackets:
google (baidu.com)
ebay (taobao.com.cn)
feedburner (feedsky.com)
youtube (6.com.cn)
there are a number of others, these are just off the top of my head.

These US companies will NEVER be successful in China, no matter WHAT they do.

Scarlett Wang

February 26, 2008 09:23 AM

I'm a Chinese, who is using baidu.com, google.com,taobao.com and ebay.com. I choose baidu.com for local research, google.com for international research.I had good online shopping experience with Taobao.com,great selections,trusty payment, and i can talk to the owner online... It just like I'm doing shoping in any department store. Simultaneity, there seem like ebay.com missed something. Maybe the color is not as exciting as Taobao.com, maybe it's the interface which is not as amiable as Taobao.com, maybe others.
Therefor, ebay's failure in China market does not mean China is not a good environment for ebay.com or ebay.com is not a good online marketplace. There matter of this case should be:
1) ebay.com need do more work about local market research, which can hlep them avoid unnecessary missunderstanding with government;
2) ebay.com need study and understand local consumer's behaviour. Local culture and habitude can influence business deeply, especially for shopping, mood can decide the action.
3) There is an old saying " one hero need three assistants ". Individual hiro does not work in China. Inter-relationship is very important in contemporary business market.

At the end, I truely want to see ebay.com turning the table, and more foreign companies have good future in China.

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