Ebay.S Strategy in China: Alliance or Acquisition

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Table of contents
E-Bay Company4
The Chinese opportunity6
The main problem8
Tom EachNet11


E-Bay was the first company that made possible to sell products on the internet. Nowadays, internet takes a huge place in business activities and not only for B2C or B2B business but also in C2C. This last point is the main activity of E-Bay. But this system buyers and sellers never meet, they exchange money for goods and E-Bay doesn’t have to be involved in the most important and expensive part of the e-commerce (or e-business) which is shipping the product (this part is the responsibility of the seller). E-Bay, and in general, all the online auction sites that we have nowadays, are the true embodiment of a ‘frictionless marketplace’. In this case we will see the problematic of E-Bay business expense in China. In fact, this country can’t be tackle as the US market for the cultures and the values of the customers. Such system where buyers and sellers never meet and the price only goes up over time was going to have a tough time penetrating the mainstream society. China know a lot of local competitor on the market as taobao.com and alibaba.com and e-commerce in general rose over 60% from 2004 to 2005, which represents a growth from $43 billion in 2004 to $70 billion in 2005. So in this paper we will see a presentation of E-Bay and the Chinese market. Then we will focus on the main problem with EachNet acquisition in order to enter on the market. To finish we will present the Tom EachNet joint venture which was a solution of E-Bay in order to increase its market share and we will conclude with some recommendations.

E-Bay Company
E-Bay is a US company offering e-commerce, e-payments and internet communication services globally which was founded in 1995 in California. E-Bay is the world’s online market place enabling trade on a local, national and international basis with a diverse and passionate community of individuals and small businesses; E-Bay offers an online platform where millions of items are traded each year. Thanks to E-Bay, sellers have the opportunity to list products to sell on the website while buyers can browse them and bid in those interested them through auctions. The role of the company is not to make the mediation but just inform the seller and the buyer by e-mail when a bid is exceeding the seller’s reserve price. E-Bay is doing is business by charging fees to the seller when they integrate the product at sale, optional fees are also practiced for making goods more visible and in addition, E-Bay takes as well percentage on the sale. The head office is based in San Jose, in Silicon Valley in California. Meg Whitman is the director. This company employs 13,000 people and had a turnover worth $7.67 billion in 2007 and $8.54 billion in 2008, which represents a benefit of $1.78 billion in a single year. Also E-Bay becomes an international brand; the company is managed by people with competencies in different part of business as marketing, finance or technology as well but also thanks to a simple and accurate business model where the company takes fees and commissions on transactions done on its platform. The company is developing itself to global market thanks a strategy including acquisitions, alliances and joint-ventures with local partners. In 2006 the international activity of the company represents the same revenue as the US market:

The Chinese opportunity
China represents an attractive place to make business, with an ongoing economic growth, a gradual integration to the global trading community, an increasing place let to internet and mostly an enormous population. Lasts graphics (exhibit 14 and 15 page 31 and 32) of the Capstone Case show that Chinese people have more and more access to internet and to become more and more interested in the e-commerce applications. But the most...
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