Essay on EBay China 022509 THEN

Submitted By hell32o4u3905u
Words: 491
Pages: 2

Strategy in China:
Alliance or Acquisition
By:
Bill Focht
Lori Fox

History of eBay in
China








1995 established C2C & B2C online/virtual marketplace in U.S.
2002 entered China purchasing 33% of EachNet for about $30M
2003 eBay acquired the remaining shares for about $150M re-branding as eBay EachNet
Competitor TaoBao was founded in 2003
2005 eBay acquires Skype expanding into online communications sector
2005 Alibaba forms partnership with Yahoo resulting in TaoBao becoming wholly owned subsidiary of Alibaba
2006 eBay announces joint venture with TOM Online

Problem Statement
In 2006, eBay was in the midst of merging with a
Chinese based company, TOM Online, and were faced with deciding which strategy would be better to increase revenue growth in China: leveraging a merger with TOM online or considering alternatives such as investing in its current product and services offerings to reposition the brand.

Strengths


Strong brand image



14% market share in global e-commerce



Unlimited transaction capacity



Successful international presence - 221.6M registered users



Unique user feedback system



No inventory costs



Development and ownership of PayPal



Embedded cross-selling opportunities



Reputation for non-counterfeit products

Weaknesses


Perception of poor customer service



Lack of buyer and seller interaction prior to sale



Bidding process unfamiliar in Chinese culture



Lack of “trust” as non-local company with short history



Centralized decision-making and lack of local insight



Web-site “too empty” for Chinese taste



Reputation for non-counterfeit products

Opportunities


China economy growing in leaps



Chinese internet users ballooned to greater than 200M



Number of online shoppers at 55M and growing rapidly



Transaction value of C2C ecommerce market in China 23.1B and growing



Lack of “trust” as non-local company with short history



Chinese governmental regulations are reducing



Opportunity for merger with TOM Online

Threats


Fierce competition from local rivals



Competitive pricing strategies



Need for more capital investment



Third company philosophy and management team would