eBay's Problems in China

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Case Details:

Case Code : BSTR278
Case Length : 19 Pages
Period : 2002-2007
Pub Date : 2008
Teaching Note :Not Available
Organization : eBay
Themes: Globalization | International Business | Joint Venture
Industry : Internet and E-Commerce
Countries : China

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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"We do not anticipate fading from China, we are very committed to the China market and we think the China market is going to be a very big market for m-commerce (mobile commerce) as well as e-commerce."¹

- Meg Whitman, President and CEO, eBay Inc, in 2006.

"I think it's a question of recognizing that they were not achieving what they were hoping to, and finding a solution that offers them a better opportunity for the long term…. I think it's an indication of how complex and difficult China is. In most of the other countries where eBay has expanded, those have been pretty mature and stable economies. China is neither."²

- Patti Freeman Evans, Analyst, JupiterResearch³, in 2006.

eBay Changes its Strategy in China

On December 20, 2006, eBay EachNet⁴ entered into a Joint Venture (JV) with TOM Online Inc.⁵ (TOM Online) to form TOM eBay. The JV was set up to explore opportunities for the growth of e-commerce and m-commerce in the highly competitive Chinese market.

This marked a change in eBay's strategy in China as its Chinese site had failed to live up to expectations. However, Meg Whitman (Whitman), President and CEO, eBay, refused to admit defeat and said that the JV was an evolution of their strategy in China and that it would help them foster growth in the Chinese e-commerce market.

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1] "eBay CEO Whitman Says Company 'Not Fading' from China,"December 20, 2006.

2] Will Swarts, "EBay Partners with Tom Online in China,"www.smartmoney.com, December 19, 2006.

3] JupiterResearch is a leading provider of information services to the IT and technology companies.

4] eBay EachNet is a subsidiary of eBay Inc. in China. eBay Inc. (eBay) is the world's largest online auction company and has around 233 million online auction users. The company had revenues of US$ 6 billion in 2006. In addition to providing online auction markets, eBay also has an online payment service called PayPal and a communications business under Skype, which offers voice-over-Internet protocol (VoIP) services.

5] TOM Online Inc. is a Chinese online portal and wireless Internet company. It was the media flagship of Hong Kong-based conglomerate Hutchison Whampoa, which had interests in Operating of ports, Retail, Property development, and Communications.