Ebay’s Strategy in China: Alliance or Acquisition Essay

In December 2006, eBay Inc., a US company that offered e-commerce, e-payments and meshwork communication benefits globally, announced its plan to form a peg judge with china-based online portal and wireless operator, turkey cock Online, in which eBay would have 49% ownership.1 The move reflected the increasing difficulties foreign internet companies were facing in their attempts to entrap a share of the Chinese market amid fierce competition and a changing market environment.eBay first set foot in chinaware in 2002 by acquiring 33% interest in EachNeta domestic online auction sale company, followed by a full acquisition in 2003.2,3 In 2005, eBay acquired Skype4 to expand into the online communication sector. While Skype was a wholly own subsidiary of eBay globally, it operated indirectly in China via a joint venture with turkey cock Online. Due to this existing relationship between the two companies,5 tom turkey Online seemed to be a natural choice of partner for eBays subs equent decision with regards to its online marketplace business. Recognising TOM Onlines local knowledge and political connections, eBay believed that a joint venture would benefit its failing business in China and help the company further develop its Chinese market.6 more or less analysts questioned whether political connections alone were the answer and suggested that eBay focus on its product and service offerings.7 1Vara, V. and Chao, L. (20 December 2006) EBays China retreat highlights a gawk market, Wall Street Journal. eBay (Date Unknown) eBay and EachNet Team Up in China, Press Release, http//investor.ebay.com/releasedetail.cfm?ReleaseID=74802 (accessed 27 April 2007). 3After the full acquisition in 2003, eBay operated under the name of eBay EachNet. 4Skype is a peer-to-peer software program that allows batch to make free calls over the internet to anyone who also subscribes to this service. Skype provided peer-to-peer internet telephony serviceie, instant messaging and online telephone service. In 2005, eBay acquired 49% bet on in Skype China, with TOM Online owning the rest. Source Schwankert, S. (20 December 2006) EBay to replace Chinese auction site with JV, ITworld.com, http//www.itworld.com/Tech/2403/061220ebay/ (accessed 27 April 2007). 6Bradsher, K. (22 December 2006) With TOM Online, eBay gains Chinese clout, International Herald Tribute. 7Rein, S. (24 December 2006) TOM Online Must Focus on Products Connections Dont Ensure succeeder, SeekingAlpha, http//china.seekingalpha.com/article/22946 (accessed 20 June 2007). 2Isabella Chan prepared this case under the superintendence of Prof. Zhigang Tao and Dr Jiangyong Lu for class discussion. This case is not intended to show legal or ineffective handling of decision or business processes. This look into was partially supported by a grant from the University Grants Committee of the Hong Kong finicky Administrative Region, China (Project No. AoE/H-05/99).