eBay To Take Another Swing At China
By Christopher Nickson
June 22, 2007
After experiencing failure in China once, eBay is returning later this year, working with a new partner — and new rules.
After failing to completely crack the online auction market in China once, eBay is going back for a second attempt.
The auction giant will re-launch there in a few months, using a local partner, TOM Online, and employing new restrictions that it hopes will eliminate the sale of counterfeit goods.
To be known as TOM eBay, the new venture will have some significant differences from the last attempt. There will be a limit on the amount of luxury goods any one person can sell, and payments will be held in escrow until the purchasers are happy with the quality of goods received.
“Whatever we do elsewhere to assure trust and safety, in China we have to do more,” said eBay head Meg Whitman.
TOM Online will own 51% of the new venture, for which it’s paid $20 million. eBay is investing $40 million for its 49% stake. The companies will split revenues and profits.
eBay has experienced failure in both China and Japan before, and currently has no plans to re-enter the Japanese market, where Yahoo has great dominance. Coincidentally, Yahoo has now pulled out of the North American auction market in the face of eBay’s dominance.
In 2003 eBay, then partnered with EachNet, had 79% of the online auction market in China. However, the launch of Taobao, owned by Chinese e-commerce giant, Alibaba, eroded that position, and within two years eBay’s share had fallen to just 36%.
The move back into China makes sense. Skype, the Internet phone service that eBay bought, has more customers there than in the U.S., and it continues to experience phenomenal growth there.