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Teaching Note Details:
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eBay's Strategy in China: Alliance or Acquisition                                                                                                                                                                                                            
Product Ref: 07/364TN Company: eBay China

Product Type: Teaching Note Industry: Retail & Wholesale
Software & Services

Related Product(s): Case
In December 2006, eBay Inc., a US company that offers e-commerce, e-payments and internet communication services globally, announced its plan to form a joint venture with China-based online portal and wireless operator, TOM Online, that would give each company 49% and 51% ownership, respectively. This was eBay,s third strategic move in China, following its acquisition of a 33% stake in domestic counterpart EachNet in 2002 that marked its entry into the market, and a full acquisition in 2003. Despite the initial good results, eBay had been losing market share to local rival and Alibaba,s fully-owned subsidiaryˇXTaoBao. By 2006, eBay had seen its market share drop from a high of 85% to a staggering 29%, while TaoBao,s continued to increase, reaching 60%. The joint venture was therefore an attempt by eBay to save its failing Chinese operations. The move also reflected the increasing difficulties foreign internet companies were facing in China because of fierce competition and a changing market environment. eBay believed that it would benefit from TOM Online,s local knowledge and political connections. However, some analysts questioned whether political connections alone were the answer and suggested that eBay focus on its product and service offerings instead. How could eBay leverage the joint venture to its success in China? What alternatives did eBay have for enhancing its strategic position in the Chinese market?
Functional Area : Strategy & General Management

Issues: Strategic management
Length: 7 pages Country: China (People's Rep. of)

Pub. Year: 2007 Level of Difficulty: 2
This product type is available in the following language(s):      English
Related Information: eBay, China, US, internet, online auction, online marketplace, ecommerce, C2C, EachNet, TOM Online, online portal and wireless operator, mobile service, acquisition, joint venture, market share, competition, TaoBao, Alibaba
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