Case Study “Ebay in China”

1652 Words Dec 16th, 2010 7 Pages
Question 1

eBay first entered the Chinese market in 2002 by acquiring a 33% stake in its local counterpart, EachNet, followed by a full acquisition a year later in 2003. Critically assess eBay.s choice of market entry strategy for China, listing both the advantages and disadvantages of its acquisition strategy.

As we know, eBay’s China expansion strategy can be considered as failure, despite the fact that eBay entered this potentially rewarding market with caution. This cautious strategy was very unusual for eBay, because they used full-forced, head-on,
.be-first-or-nothing. strategy in other markets, for various reasons, it would be impossible to implement this strategy when penetrating Chinese market. So acquiring an already
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TOM Online has a good experience in cooperation with Skype and has given great results in it. This shows that TOM Online knows how to present new product in the market and how to increase its market share, which is essential for eBay at the moment.
All the aspects of TOM Online show that this company has a great and efficient knowledge of Chinese market and exactly this feature is very necessary for eBay to gain good results. In addition, political connections of the TOM Online can be very helpful in Chinese market, especially in nowadays and situation in China.

Risks of this joint venture are not as great as benefits, but there is a risk to loose a chance to strengthen the eBay brand, because Chinese customers will be focused on the TOM Online and EachNet. There also is a risk of loosing big amounts of money, because TOM Online has a 2% bigger ownership, but in amount of money, eBay invests two times more money, however the success of the TOM EachNet depends more on TOM Online.
There also can be assessed as a risk point, that TOM Online is focused on mobile value-added services and their target audience is generally young consumers, but eBay target audience is a little older. Question 3

eBay will have a 49% stake in the new joint venture while Tom Online will have 51% ownership. Critically assess both companies’ decisions on their respective percentage of stake

In our opinion E-Bay’s decision to joint

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