Ebay is one of the original e-commerce success narratives in the United States. get downing operations in 1995 and go oning to turn and spread out into assorted ventures which support their on-line auction sites since so. With its success in the United States. Ebay began to spread out into foreign states and in 2003 it acquired China’s first on-line auction site. EachNet for $ 180 million ( Tycoon Report. 2006 ) . China is imbued with an copiousness of enterprisers and their society is such that selling. and higgling over monetary value. are deep-rooted parts of their civilization.
Online auction sites allow the mean Chinese citizen to go an enterpriser by purchasing measures of ware at low monetary values from local mills and selling this ware to their biggest market: aliens. particularly United States citizens ( Tycoon Report. 2006 ) . Until Taobao – which is partly owned by Yahoo – came along. EachNet/Ebay enjoyed a practical monopoly on the on-line market concern.
Since Taobao came onto the playing field. they have managed to snag the bulk of on-line shoppers. at 67 % . of the market ( Stone. 2006 ) along with their payment system. AliPay. which is the preferable method of payment with Taobao. Harmonizing to Toto Sun. Taobao’s general director. “Taobao’s growing has been based on four pillars – trust and safety. the AliPay payment system. hunt and an active marketplace” ( from Stone. 2006 ) . What Sun does non advert is that Taobao does non bear down its Sellerss a listing fee. When faced with a pick. Chinese enterprisers seem to clearly prefer the absence of fees and the AliPay system.
Jack Ma is the 43-year-old found of Alibaba. the company that owns both Yahoo China and the Taobao on-line auction site and it was the former schoolteacher’s determination to get down concern without bear downing fees ( Einhorn. 2006 ) . taking alternatively to bring forth its gross from advertisement placed online at the site. Ebay’s determination to fire China CEO Martin Wu was followed with rumours that the company was sing selling off its Chinese division ( Zazaian. 2006 ) while Yokel was being accused of selling out to the Asiatic market.
Alternatively. Ebay decided this twelvemonth to spouse with YeePay for its freshly re-launched EachNet on-line payment and escrow services ( China Tech News. 2007 ) . Ebay is seeking to take a measure in the right way by first redesigning its Chinese on-line auction site and so partnering with YeePay. which is a Chinese company offering several diverse services such as keeping money in escrow until the purchaser claims satisfaction with his purchase and verifies user individualities through bank histories ( China Tech News. 2007 ) . However. until Ebay eliminates its sellers’ fees. it can non truly get down to vie with the country’s giant Taobao and its native laminitis.
Ebay has much ground to do up after losing its market portion so to a great extent in China. Taobao has about tripled its 2007 first financial half period grosss while Ebay posted a 30 % twelvemonth over twelvemonth net net incomes addition in the second one-fourth of this twelvemonth. Although this represents record net incomes from Ebay. most of it came from their subordinates of Skype and Paypal. It remains to be seen whether Ebay will be able to resile back from its slack in China. Until the company rethinks its fee constructions. Taobao’s Jack Ma will be seen express joying all the manner to the bank and numbering his 1000000s of hankering.
