Essay on EBay China 022509 THEN

Submitted By hell32o4u3905u
Words: 491
Pages: 2

Strategy in China:
Alliance or Acquisition
Bill Focht
Lori Fox

History of eBay in

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.


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


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


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


Fierce competition from local rivals

Competitive pricing strategies

Need for more capital investment

Third company philosophy and management team would