Competitive Advantage Case Study

eBay in China: Strategies and Challenges

OR

Abstract:
eBay a world leader in the online auction industry entered China in 2002. It faced severe competition in the Chinese market from a local player- Taobao.com operated by Alibaba.com, China’s largest B2B operator. eBay also faced restrictions in the operation of its payment service, Pay Pal. The Chinese Government imposed regulations requiring domestic control over financial services companies like Pay Pal. After nearly five years of operation in China, eBay was left with only 29% market share as against Taobao’s 67%. eBay tried to adopt its U.S model in its Chinese operations, although with some alterations to suit local needs. In December 2006, eBay announced a joint venture with TOM Online, China’s popular wireless operator and looked forward to a revival in its Chinese operations. The case facilitates discussion on whether eBay would be able to establish itself in the Chinese market. The case can be used to teach courses on Strategy and to specifically discuss challenges faced by global players in China.

Pedagogical Objectives:

• To analyse the business model of eBay
• To analyse the dynamics of online auction industry in china
• To understand the factors behind eBay's failure in capturing substantial market share in china
• To analyse whether eBay would be able to establish itself in the chinese market after its joint venture with TOM online

Keywords : eBay; Business Strategies; Online Auction Industry; Chinese Internet Market; E Commerce Market; Re entry Strategies; Strategy Management; eBayEachNet; PayPal; eBay's Stragegy; Core Competency & Competitive Advantage Case Study; TOM Online; Alibaba; Meg Whitman; Taobao