1. Why did eBay success in US but fail in China? What could have eBay done to avoid defeat?
There are many reasons that eBay defeat in the competition with Taobao.com in the Chinese Internet C2C market. First, based on research of C2C market in China, the user (seller) of the website is price sensitive. Since Taobao launched no-free model, eBay lost their customers. Furthermore, eBay’s payment services did not fit the Chinese credit payment systems. For example, PayPal, one of the payment methods of eBay, was prohibited from offering international transactions and flexible credit. There are some other issues including that eBay as an international website faced some ethic dilemmas about the counterfeit merchandise.
Because of the particular market situation in China, eBay should treat Chinese market differently. Based on the analysis of eBay China, the fail of eBay in China is mainly due to the lack of understanding of Chinese Internet C2C market. As Taobao’s CEO, Jack Ma said, eBay may be a shark in the ocean, but Taobao is a crocodile in the Yangtze River. If they fight in the ocean, Taobao lose – but if we fight in the river, Taobao win.
Since Chinese e-business market is so different from the global online business market, to avoid defeat, eBay should have separated the Chinese Internet C2C market from the global online business market. Then when the competition begins, eBay should have come up with an effective revenue model to compete with Taobao.com and more importantly build a strong business relationship with the Chinese government in the beginning. However, there may be another different answer eBay should consider cooperate with Alibaba.com when they entered the Chinese Market to build a new brand.
2. Do you think eBay should continue developing its business in China and competing against Taobao?
Based on the analysis of the competition between Taobao and eBay, I believe that eBay should continue developing...