How Ebay Lost China

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Trident University International

BUS 401/Module 1 Case Assignment

While many companies have successfully forayed into Asian markets, such as China and Korea, eBay has had a tough go of it. There are a number of reasons for this. First, eBay crashed in China when the decision was made to move operation say-so from China to California. EBay also underestimated the strong ties that Asians felt toward the online auction media already in place. In addition, eBay failed to understand the political implication of doing business in China. Ebay entered the Asian market in 2003 with the purchase of EachNet. Ebay, through EachNet cornered 90% of the market share for online auctions in China at the time. Loyal EachNet users kept coming back. Then, decision making responsibilities moved to eBay headquarters in the United States. Critics say that the breakdown in communications that followed created an environment where it could take weeks just to get a misspelled word corrected on the website (So & Westerland, 2009). In addition, the servers were moved to the United States, which caused slower connection times. When this happened, it caused a drastic drop in eBay users. Ebay also underestimated the strong ties that the Chinese felt towards the systems already in place. When eBay bought the Chinese online auction site EachNet, they initially kept the homegrown technology used by EachNet; however, eBay’s CEO at the time (Meg Whitman), wanted all eBay users to use the same interface and be able to bid on items all the world over. The term used to describe this process was called “migration”. When the transition occurred, eBay lost over 50% of their registered users (So & Westerland, 2009). While eBay was trying to put down roots in China, the Chinese government was busy trying to find ways to regulate internet traffic into the country. The Chinese government succeeded in creating what became known as “The Great Firewall of China”. Internet users in China have always...
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