Case study ebay in china composition

EBay first entered the Chinese industry in 2002 by obtaining a 33% stake in the local comparable version, EachNet, followed by a full acquisition a year later in 2003. Vitally assess amazon. s range of market access strategy for China and tiawan, listing both advantages and disadvantages of its obtain strategy.

To be sure, eBay’s China expansion technique can be considered while failure, despite the fact that eBay moved into this possibly rewarding market with extreme care. This cautious strategy was very unconventional for eBay, because they will used full-forced, head-on,.

be-first-or-nothing. technique in other market segments, for different reasons, it would be impossible to implement this tactic when going through Chinese market. So obtaining an already comparatively familiar and well-established brand seemed to be the best way to continue eBay’s enlargement in Asia.

Without a doubt, Each Net was the best prospect for buy at the time. When ever eBay acquired 33% shares of Each Net in 2002, it looked like there was hugely successful, because in year the year 2003 the value of Every Net experienced doubled and market share acquired rocketed to 85% – this preliminary success urged full purchase of Each Net.

To be sure, the achievement did not turn out to be long-lasting, despite the fact that in starting years the performance of the company was brilliant. Although acquisition of Every Net meant many advantages of eBay, additionally, it implied significant disadvantages.

Benefits of Each Net acquisition:

•Each net had strong financial resources from large venture capital companies

•Immense market potential – you, 23 billion Chinese language audio system all around the world

•Rapidly increasing number of internet users in China and tiawan – raising number of prospective customers •Each Net in essence was an bogus of auction web sites, adjusted to adjust to Chinese consumer needs, good results . much greater acknowledgement in China

•Increasing popularity of shopping online (also through the use of Each Net) in Chinese suppliers.

•Well established picture of Each Net in Cina

•High Each Net market share (about 50%) in year 2002

•Wide range of different items sold through Every Net

•Only significant player in online public auction market in China by year 2002 was Every Net

Down sides of Each Net acquisition:

•Cultural differences and buying practices of Chinese language.

•Huge investments needed

•Unpredictability of the fast-changing Chinese market – huge risks

•Emerging rivals – TaoBao (Alibaba subsidiary), which outcompeted eBay Every Net at a later date, by better adjusting to Chinese language customer requires and buying practices

•Alibaba had competent presence in China and far better knowledge of Chinese consumers – reason behind increasing insufficient consumer trust in eBay Every Net at a later date

•Each Net did not create client trust in foreseeable future, while TaoBao succeeded

•Chinese refusal of taking on traditional amazon practices (Pay Pal and so forth )

•Lack of interaction options between customer and owner, provided by eBay Each Net – very important to Chinese, TaoBao was significantly better in this aspect •Comparatively poor customer service

In conclusion, this acquisition, which was possibly the right stage by auction web sites, turned out to be failure, despite the fact, that at first that seemed to be an enormous success. I think it is because eBay’s management was so stressed with the initial success, that they can lost extreme caution – they were very mindful at start but did not adjust to client needs, they were doing not pay enough awareness of them, which in turn led to craigs list Each Net to situation where we were holding outcompeted simply by TaoBao in Chinese marketplace.

Question a couple of

Assess the potential benefits and risks of eBay’s joint venture with Ben Online.

Within an eBay’s and TOM Online formed partnership there are some benefits as well as a lot of risks. One of many benefits is the fact TOM On the web is a Chinese language domestic manufacturer, which is far better for buyers of Chinese suppliers. They mostly like well known Chinese language internet brands. TOM On the net is a industry leader in China in sphere of mobile value-added services and has an net portal, which can be one of the biggest and many popular in china, it indicates that JEFF Online is a well find out brand in China and is also rapidly recognized in the internet.

BEN Online includes a good knowledge in cooperation with Skype and features given superb results in it. This implies that TOM On-line knows how to present new product available in the market and how to increase its market share, which is necessary for eBay at this time. All the aspects of TOM On-line show that this company provides a great and efficient knowledge of Chinese market and exactly this kind of feature is extremely necessary for auction web sites to gain good results. In addition , political connections with the TOM Online can be very helpful in Chinese marketplace, especially in today and condition in China and tiawan.

Risks of the joint venture aren’t as wonderful as benefits, but there exists a risk to loose the opportunity to strengthen the eBay company, because Chinese customers will be focused on the TOM On the web and EachNet. Presently there also is a risk of loosing big amounts of money, because TOM On the net has a 2% bigger control, but in amount of cash, eBay spends two times more cash, however the achievement of the TOM EachNet will depend on more on TOM Online. There may also be examined as a risk point, that TOM On the net is focused about mobile value added services and their target audience is generally young consumers, but auction web sites target audience is older.

Problem 3

craigs list will have a 49% stake in the fresh joint venture although Tom On-line will have 51% ownership. Vitally assess the two companies’ decisions on their particular percentage of stake

Inside our opinion E-Bay’s decision to joint venture with TOM On the web was a great success. Although E-Bay can be described as giant and successful business in US and offers successfully widened worldwide, China is a “Hard-Nut” for them. China’s cultural variations and ethical values lead them to face a lot of difficulties in setting up craigs list business. Oriental people still trust their own companies more and respect them.

TOM Online is a good company with a good reputation and has already attained trust of millions of clients. Their activity area is usually not far from eBay’s – mainly internet and other IT services, and portable entertainment. BEN Online was also increasing rapidly and cooperating with assorted influential companies as for model Skype. Nevertheless lately in addition they had a decrease in revenues therefore joint venture also was a chance for them. That way they increased their support range which meant fresh opportunities.

So why eBay 49% ownership and 51% to TOM On the net? Why then eBay even now invests more? And so why the term ‘eBay” disappears through the name on this joint venture – “TOM Eachnet”. We think that that is quite obvious. There are numerous factors which usually explain this case. As we know the China culture is incredibly different and trust and respect are extremely substantial conditions. So by erasing the US brand name from your joint venture name people could trust that more. Furthermore both TOM and Each net are known as local brands.

In this partnership TOM invests US$20 million and has contributed its neighborhood knowledge, technology and brand value, which are much more important than funds – this explains how come eBay spends twice as more. Moreover TOM Online offers very important persons among their investors. This joint venture would open up a whole fresh market portion for both equally – craigs list and also MARY Online, letting them fulfill and widen significantly together. They can also permit eBay into “mobile world”.

As we all know – China continues to be always completely different and that is the reason why setting up a stable, successful company has been a “hard battle” individuals. But it is also a huge amount of consumers (almost 1, 5 billion) which then means a great revenue if do well. eBay EachNet understood than they are too unstable and the stakes are too high, therefore the joint venture with TOM On the internet and creating JEFF EachNet was the best chance.

Question four

Tactical recommendation about International Industrial Strategy for E-Bay

Increase revenues by recording more buyers

Increase in the customer base can positively lead to increase in revenues, customer commitment schemes could possibly be developed additional in order to ensure that more persons fall into the category of dedicated customers, the skills could be better in order to serve some personalized customer needs, a larger advertising campaign might be carried out in order to appeal to a wider market segment, perhaps even trying to work together with some markets of the industry providing strategies to their complications, satisfying their demands and wants. Look into new pay system or produce own (PayPal only in 38 countries) Increasing the number of ways how customers can pay for their purchases will ensure that revenues expand and that a wider appeal will be directed at the company – the services will be interesting equally to mastercard owners, pay pal users thus ensuring that customers can make the method through which they would like to pay money for their obtain – this process will also contribute to the solution of security worries since persons will be able to opt for the method that they consider as the safest 1.

The Company ought to look at acquiring shopping evaluation sites and vertical search engines to drive visitors and acquire consumers. Ebay also need to consider how they may compete with Bebo, facebook and youtube, as a lot of advertising is made through these sites, like google adwords is usually giving wonderful traffic to Craigs list, it is also a rival to Ebay, this proposes various other similar sites. Company may also enlarge to the mobile sphere. Make craigs list available for in mobile phones and PDA’s yet others. As that is certainly one of JEFF Online activity sphere, it could be easily completed and there is already an available previously shaped customer group, who could be also very enthusiastic about this kind of services.

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