Why eBay failed in China
The main reason eBay failed in China was because eBay failed to recognize that the Chinese market and the business environment are very different from that of the West. EBay sent a German manager to lead the China operation and brought in a chief technology officer from the United States. Neither one spoke Chinese or understood the local market. It was eBay’s biggest mistake. Second, because the top management team didn’t understand the local market, they spent a lot of money doing the wrong things, such as advertising on the Internet in a country where small businesses didn’t use the Internet. The fact that eBay had a strong brand in the United States didn’t mean it would be a strong brand in China. Third, rather than adapt products and services to local customers, eBay stuck to its “global platform,” which again did not fit local customers’ tastes and preferences. "eBay failed to recognize that the Chinese market and the business environment are very different from that of the West. Not only eBay most US Markets fail in China , when they get to China, they try to do what they did in the US, and quickly discover that the rules in China are very different. tech brands such as eBay, Google, Facebook, Amazon and Yahoo have done very poorly against their Chinese counterparts. While some of this can certainly be blamed on government favoritism, it is not the only reason. Consensus appears to be that these brands just did not understand the Chinese consumer. Chinese culture is very different than, than American’s in this case. The, consumer’s expectations and needs are different too. While eBay didn’t want or think to adapt its strategy, Alibaba perfectly adapted to the local culture. By looking at the Tobago website you can tell that, it is a Chinese platform. To compete with eBay, Jack Ma (Alibaba’s founder) has given a strong local identity to Taobao(website). First, every member of the administration team had to choose a nickname, and all of them are from fictional characters from Jin Yong’s famous kung fu novels. This message is important because Chinese people are very nationalist. They are proud to be Chinese and as China is a collectivist country, this kind of identification is stronger than identifying themselves as individuals. That is why Jack Ma chose to give a strong Chinese culture reference to the platform. The second thing was choosing nickname is giving an informal attitude, which is the key to allow people to feel welcoming and being a member of a community. Secondly, Taobao website was developed in red and orange, which symbolize festivity and prosperity in Chinese culture, a very positive message for online customers. eBay’s error was to ignore the importance of the trust in the Chinese culture. In USA in general the main motivation to buy a good it’s the price. Of course they need trusting the seller, but the trust in China is much more than that. Paul Ingram, professor at the Columbia Business school specialized in social network explained: In the West, we tend to reserve trust from the hurt (affect-based trust) for family and friends and trust from the head (cognition-based trust) for business partners. We see emotional concerns in business as unprofessional. But in China, affect- and cognition-based trusts are highly intertwined, even in business. It is important that business partners have an affective bond. Few Chinese business relationships develop without socio-emotional exchanges such as sharing meals, gifts and socializing with each other’s family. That is why Taobao provideed many aspects to facilitate confidence among sellers and buyers. 1) The main one is AliWangWang, the Alibaba’s chat. Its function is to allow sellers and buyers to communicate. This tool has 2 main advantages. The first one is that Taobao proposes mostly fixed prices and only few auctions (on the contrary of eBay). It means that people can negotiate prices with sellers. It is...
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