[photopress:eachnet_1.jpg,full,alignright]A massive shake-up at eBay’s major divisions based in China caused by slipping sales figures. Martin Wu, was hired last September to lead EachNet, the Chinese online retailer bought by eBay for about $180 million a year ago. This week it was confirmed that Martin Wu has stepped down as EachNet’s chief. An eBay comment was that Martin Wu has ‘decided to pursue opportunities outside eBay.’ That is flack-speak for someone being asked to resign.
Taking his place: Leff Liao, head of PayPal China, who will hold both positions. PayPal provides the transaction processing for EachNet and other Chinese online retailers. This is probably only a transitional appointment.
The official word is that EachNet and PayPal China will ‘look for ways to align operations where appropriate.’ The possibility exists they may merge or eBay may sell some or all of its China operation because the competition is too strong.
There is a suggestion elsewhere in the media that Tom Group, the media group controlled by Hong Kong billionaire Li Ka-shing, may take over Eachnet and its online payment service and the China division of PayPal.
The four year old business newspaper 21st Century Business Herald reported that Hong Kong-listed Tom Group would announce its takeover of eBay’s China division and its PayPal service within a few days. It said an agreement between the two companies had already been signed. Adding fuel to that particular rumor fire Lee Shuk Wen, an official from Tom Group, said they were ‘open to the business opportunities on mainland but have no details to disclose at present.’
As this is written nobody is talking over-much but it is agreed it is unlikely the eBay will withdraw totally from the China market but it may well seek a Chinese partner.
eBay bought one-third of Eachnet’s stake for $30 million in 2002. It spent another $150 million on the remaining shares of Eachnet in 2003. Shortly after that, eBay Eachnet’s share in the consumer-to-consumer market went down under competition from taobao.com.
The problem came down to price. This is not uncommon in Asia. Taobao.com was free trading. Eachnet collected a commission of up to RMB8 ($1) for each item sold on its site.
The China Internet Network Information Center (CINIC), the country’s official Internet statistical agency estimates that by last year, Taobao accounted for 67.3 percent of the C2C market in Shanghai, Beijing and Guangzhou, much higher than eBay’s 29.1 percent.
Yu Yang, president of Analysys International, a Beijing-based research company, said, ‘It is possible that eBay will reduce its investment in China because of its poor performance in the past three years over pressure from its shareholders. But China is such a big market that no big multinationals can afford to lose, so it’s unlikely that it will completely withdraw from China.’
* A stage direction in Shakespeare’s The Winter’s Tale
Source: Shanghai Daily