[photopress:Taobao_auction.jpg,full,alignright]EBay, led by president and chief executive Meg Whitman, says it will not retreat from China despite losing serious money and even more serious market share. eBay China’s spokeswoman Lilian Liu, who insists the company has a long-term commitment to the mainland, said, ‘The China market is a long-term, strategic priority for eBay and we will be fine-tuning our strategies to adapt ourselves to the evolving market and competition.’
In vulgar journalistic circles this is called spitting into the wind.
An industry source said, ‘EBay has spent between US$300 million and US$400 million in China.’ And its market share has dropped to about 28 per cent in the first quarter of this year from more than 80 per cent when eBay bought EachNet, then the largest mainland online auction site, in 2003. EBay spent US$180 million buying EachNet and a further US$100 million last year to build up the operation. But it is nowhere near the market leader.
Taobao, which is the market leader, is owned by Alibaba, which subsidises its online auction division with profit from the parent’s business-to-business site. Latecomer Tencent is happy to keep its online auction site, Paipai, running just for cross-sales with other services on its hugely popular instant messaging platform, QQ.
eBay’s stock price has dropped substantially in the past two years, to a recent low of US$23 in August from a high of US$60 in January last year.
EBay retreated from Japan in 2002 when it failed to oust Yahoo Japan as the dominant vehicle in online auctions. More recently, eBay turned its Taiwan operation over to local publisher PChome, when it was struggling with 5 per cent market share. The site was relaunched as ruten.com.tw last month, with eBay holding a minority 35 per cent stake.
Talk of a pullback from China comes as the government is expected to carry out a pledge made last year that it will issue rules this year under which all internet payment service providers, including eBay’s 100 per cent-owned PayPal, would have to have a mainland partner.
Source: South China Morning Post