Module 1 Case Assignment International Business

E-bay in Asian Markets The international American company eBay has suffered significant financial loses in the Asian markets due to the industrial powerful country of China which has an unmatched presence on the website Asian markets. The solution for eBay’s company is come up with strategic selling plan to overcome and beat down China’s on line selling leading industry, in addition, it would be extremely beneficial for eBay’s company to lower down the purchase fees and create unique shopping features on line to make it more attractive to Asian shoppers.
Currently some statistics suggest that Chinese consumers are willing to pay for internet services that they deem worthwhile. For example, Chinese consumers purchased several hundred million dollars worth of virtual currency last year from companies such as Tencent to upgrade online personal games and buy custom ring tones for their for their mobile phones. Chinese youth have shown their willingness to make online purchases and pay for Internet services. According to the China Internet Development Research Center under the Chinese Academy of Social Sciences, e-commerce sales grew 58%, to almost $70 billion, over the last two years, with almost $3 billion of that in consumer-to-consumer sales. E-commerce growth has remained steady, as the number of Internet users in China has grown from 90 million to 130 million since 2004.
When eBay entered China, their Paypal payment method did not seamlessly integrate escrow into the sales process. Taobao's popular Alipay made escrow an important component of the online buying experience, because consumers felt confident paying money to Alipay and then only releasing the money after they had their purchase in-hand. In contrast, using Paypal made the whole process "nerve-wracking", according to one online consumer. Later attempts by eBay to incorporate escrow into the transaction process were too late to help it regain lost market share. With more than 30 million registered users, Taobao supports more than $1.2 billion in transactions a year and claims that it controls 70% of the consumer to consumer market in terms of users. In 2005, eBay had a transaction volume closer to $600 million. One of eBay's biggest problems comes from how it handled decision-making between its headquarters in San Jose and its China operations. Exit interviews with former Eachnet and eBay executives in China indicate that senior management in China felt that headquarters did not listen to them at critical junctures (Oct 12, 2006. pg. C.1). Instead, these former executives believe that San Jose directed from afar rather than trusting its China management to know what would work in China. This sentiment was especially true for executives from the original Eachnet team who felt belittled by the American team after the acquisition.
Although eBay CEO Meg Whitman has spent some time in China, the Chinese executives had more experience in dealing with the specific needs of Chinese consumers shopping online. Google's slow hiring practices, for example, were one of the reasons why it lost critical market share to Baidu in China's browser market over the past two years. Another critical mistake that that eBay made in China was thinking that its leading brand image in the United States would apply to China. This is an error made by many foreign entrants, which means that many Global number one online brands, such as Google and eBay, have struggled coming into China. EBay sought to promote its auction portal with a similar layout and similar features to those found in its American version, which Chinese consumers found far too empty. According to one Chinese blogger, their lack of a customer service telephone number also irked Chinese consumers. In conclusion, I strongly believe that E-bay failed to react quickly enough when Taobao entered the market with no user fees. E-bay Eachnet stopped charging transaction fees. E-bay has lost market share in China to Taobao and continues to face regulatory and other challenges.

References
Mangalindan, M. (2006) China May Be eBay's Latest Challenge as Local Rivals Eat Into Market Share, Wall Street Journal, New York, N.Y.; October 12, 2006.
Moon Ihlwan and R. Hof (2006) Out-eBaying eBay in Korea, Business Week, New York: July 17, 2006, p.74, Issue 3993 abstract only.

http://www.ebay.com