• Home
  • Management
  • Startup/Entrepreneur
  • Gamechangers
  • Tech/E-Commerce
  • Career
  • Global Business
  • Women's Business

  • How eBay Found A Way Into China

    EBay is one of many foreign Net companies facing a China challenge. Google (GOOG), Microsoft (MSFT), Yahoo! (YHOO), Amazon.com (AMZN), Myspace (NWS), and AOL (AOL) all stumbled there, in part because Chinese officials are determined to censor the Internet and are suspicious of the role that foreigners might play in the politically sensitive medium. (Censors have banned YouTube and Twitter, for instance, creating opportunities for local copycats.)

    Upstart: Global Business

    Linking small Chinese exporters with global consumers has given the online marketplace the entry it needs.

    There’s always been one sure way to make executives at the online marketplace eBay (EBAY) cringe: ask them about China. In 2003, eBay paid $150 million to buy EachNet, at the time China’s top e-commerce site. Chief Executive Officer Meg Whitman invested $100 million more in the operation, but a combination of management mistakes—not giving enough power to local executives, for example—and tough competition from local rival Taobao crippled the business. By 2006, eBay gave up and folded eBay EachNet into a joint venture with Tom Online. Taobao, which unlike eBay doesn’t charge commissions, has never lost the lead. “It’s very hard to compete with free,” says Jay Lee, eBay’s senior vice-president and managing director for Asia Pacific.

    While eBay doesn’t aim to challenge Taobao anymore, it does have a Plan B for China: linking Chinese entrepreneurs and exporters to eBay consumers elsewhere. The strategy is centered on sellers such as Tang Fengyan, 35, who goes by the English name Maggie. Four years ago, Tang decided to start her own dress business. She has found eBay an ideal way to sell her $50 cocktail and rockabilly swing dresses and did $700,000 in sales last year. Although eBay has minimal presence inside China, Tang doesn’t mind, since she’s chasing global customers. To reach them, eBay makes the most sense. “It’s the most famous,” she says.

    Thanks to exporters like Tang, eBay has a China business again. Transactions from China and Hong Kong on eBay and its PayPal unit amounted to $4 billion in 2010, making China the company’s fifth-largest market behind the U.S., Germany, Britain, and South Korea. “We learned a lot,” Lee says. “China is very important, but we needed a different way to approach the market.”

    To get there, eBay looked for segments of the Chinese e-commerce market not dominated by Taobao’s boss, Jack Ma, and his Alibaba Group. Taobao is dominant in China but has little consumer reach outside the country. Alibaba.com, a site connecting small and midsize importers and exporters worldwide, doesn’t cater much to consumers. EBay saw an opening and now has 150 service agents catering to Chinese sellers. Last year it launched a service, together with China Post and the U.S. Postal Service, to provide a way for foreign buyers to track their China purchases and allow sellers on the mainland to offer free shipping. The cross-border model “is an opportunity that plays to our strength, which is the export business,” says Lee. “We connect buyers and sellers—that’s what we do.”

    EBay is one of many foreign Net companies facing a China challenge. Google (GOOG), Microsoft (MSFT), Yahoo! (YHOO), Amazon.com (AMZN), Myspace (NWS), and AOL (AOL) all stumbled there, in part because Chinese officials are determined to censor the Internet and are suspicious of the role that foreigners might play in the politically sensitive medium. (Censors have banned YouTube and Twitter, for instance, creating opportunities for local copycats.)

    Read More:

    http://www.businessweek.com/magazine/content/11_17/b4225039040486.htm

    Upstart: Business and Management for 20-40 Year Old Professionals

    Filed Under: Global Business

    Tags:

    About the Author:

    RSSComments (4)

    Leave a Reply | Trackback URL

    1. Dreary Day…

      It was a dreary day here yesterday, so I just took to messing around on the internet and realized…

    2. Extra Reading…

      […]we like to honor other sites on the web, even if they aren’t related to us, by linking to them. Below are some sites worth checking out[…]…

    3. […] Global Business | How eBay Found A Way Into China | Upstart […]

    4. […] original here: Global Business | How eBay Found A Way Into China | Upstart Esta entrada foi publicada em E-Commerce. Adicione o link permanente aos seus favoritos. […]

    Leave a Reply

    You must be logged in to post a comment.