EBay Rethinks China; Will Close Own Sites, Open New One In JV With Tom Online: Report


Updated: The WSJ is reporting that eBay is making a major change in its China strategy, planning to shut its own main site and instead teaming with Tom Online in a JV. The Chinese content company would own 51 percent to eBay’s 49 percent; by contrast, eBay is expected to put up $40 million to $20 million from Tom Online. The new site would launch in 2007 with eBay holding to a site for “cross-border” trading. Tom CEO Wang Lei Lei head the JV as CEO while Jeff Liao, CEO of eBay EachNet, is expected to hold a management role and run the cross-trading site.
It’s the company’s second pullback from Asia although it comes several years after eBay’s 2002 admission of defeat in Japan. The WSJ runs some numbers: eBay has invested nearly $300 million on acquisitions and expansion in China but it is still a distant #2 to AliBaba.com’s TaoBao unit, which had 67 percent of the Chinese auction market in 1H06 compared to eBay’s 29 percent. EBay also lost a major exec in China this fall when CEO Martin Wu resigned unexpectedly – to outsiders, at least. EBay downplayed the departure at the time.
NYT: EBay CEO Meg Whitman is to make the announcement in Shanghai Tuesday. “Ina Steiner, the editor of AuctionBytes.com, an online newsletter, said that ‘a bailout in China would be a huge concession by eBay.’ She noted that last year, Ms. Whitman touted China as eBay


China Law Blog

This is a huge defeat for E-bay. Some are saying that this is their way of ending up with half a loaf, but actually, they are getting only 49% of a loaf they probably will be unable to control, which in the end may very well end up translating into the crumbs from the end of the loaf. Becoming a minority partner in a Chinese joint venture these days is, almost by definition, a recognition of defeat. Paying a lot for this "privilege" as E-bay has done here …. well that borders on ….

Jay Ma

Big US internet companies are guaranteed to fail in China because they don’t understand Chinese people and Chinese market. After Yahoo and EBay, Google is the next, no exception. Where they are (or were) innovative and user experience driven in US, they are totally ignorant of users and UE innovations in China.

Instead of acquiring and ruining Chinese local companies (Yahoo and EBay has done that, and that’s Google’s plan for next year), they should invest on and incubate local Chinese companies, just as what IDG VC has been doing.

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