Case Study: eBay Chinese Market

EBay is an American Multinational sales firm that provides online sales services to various firms. The firm plays a role of connecting the producers and consumers of various products by listing them on its website. The company entered China in 2002 by acquiring a 33% stake of EachNet and fully acquired it in 2003. However, the firm faced a stiff competition from the locally developed listing firm Taobao that was run by Alibaba owner Jack Ma.

There are various advantages and disadvantages that eBay faced in its acquisition of the Chinese market. First, eBay had a huge financial base than the local firms including the Taobao. Therefore, the firm could make its services known via advertisement. Secondly, China is the most populated nation in the world. This translates to the very high number of internet users who could be captured by eBay through EachNet (Le, 2014). Thirdly, EachNet offered a platform for development and there were no doubts that could be raised against it. The platform included charging any listing through their website. On the other hand, Taobao, their main competitors offered these services for free and most people questioned about their future. Lastly, eBay offered a wide range of items for sale through their website.

In spite of the huge advantages, eBay failed to take the control of the Chinese market through EachNet for various reasons. First, the firm did not take a survey that could have helped them understand the Chinese culture (Le, 2014). For example, they could have suggested changing the name of the firm to some cultural meaningful name. For example, Taobao managed to take over the market by adopting their name that means “digging for treasures.” In addition, the Chinese market is unpredictable due to the number of upcoming firms. For example, the Alibaba forced its subsidiary, Taobao, way into the market due to its understanding of the market. If eBay had considered these factors, it could have been successful in the China market.

Reference

Li, H. (2006). Growth of new technology ventures in China's emerging market. Cheltenham: Edward Elgar.