TaoBao vs. eBay China
Why did eBay succeed in the US but fail in China? What could eBay have done to avoid defeat?
Unlike the US, China did not have the infrastructure necessary for eBay to enter and operate successfully. Therefore, eBay was before its time in China and failed because: *
Low internet penetration rate – eBay needs high traffic. *
Lacked the norms and laws to support online exchange – trust is a key success factor in internet based businesses, and the lack of rules and means of recourse makes transacting on eBay risky. *
Undeveloped technological and financial infrastructures, which are necessary for online auctions – if people can’t pay or receive payment, there is no business. In order to avoid defeat, eBay should have implemented changes that would have “glocalized” its US model to China (i.e. “taken a case by case approach”). They were too focused on long-term sustainability and failed to realize that if they could not survive the short-term, then there would be no long-term to be worried about. Please see following suggestions on what eBay could have done. * Focused on developing eBay China in the domestic market instead of trying to integrate it to the international market. * Localized its platform to fit China’s market instead of its global platform in terms of its listing categorization, interface styles, and technologies. * Maintained its servers in China in order to be flexible and faster in making changes so that it could better compete in China’s highly competitive and dynamic market. * Focused more on the preferences of its customers in China instead of trying to conform to the global network through its “eBay formula” of generating revenues through insertion fees, final-value fees, and features fees. * De-centralized the company structure in Asia and form separate business units in each of the Asian countries instead of the single headquarter known as eBay Asia, which was located in Korea....
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