2TaoBao vs.EBay China EachNet EBay China Tao Bao Launch www.ebay.cn % 90EBay acquired EachNetTao Baofounded by Chinese entrepreneurs Bo Shao and Haiyin Tan60EBayChina30eachnet.com19992000200120022003200420062008
3EachNet Issues Strategic Decisions reluctance to complete transactions online1999trading booths in each city, bust costlyLack of trustcreate a cash-on-delivery systemlack of an efficient delivery systempartner with the four largest banks in ChinaProcess paymentsoffered escrow service &PayPal-like serviceDifficultly raise capital2000charge listing fees to sellersonline fraud2001a user rating systemconduct investigations & punish cheatersReal Name Program for user registration.
4eBay 1995 founded by an engineer named Pierre Omidyar 1998 eBay went public on NASDAQ1999Launch websites in Germany, U.K, Australia2000Launch websites in Japan, Canada, France, Taiwan and Austria2001expanded to 17 markets &had spent more than $1.6 billion on acquisitions2002Exited Japan & acquired EachNet2003James (Xigui) Zheng joined EachNet as its CFO.2006Established a new joint venture with TOM to operate C2C business2007Rank the 3rd in the C2C online marketEachNet was entirely cut off from eBay’s global platform
5eBay’s Global Strategy and Organization Changes in eBay China EachNet’s leadersplatformeBay Asia.centralized to eBay headquarters in U.Slisting categorizationserversWebsite maintenanceinterface stylestechnologiespricing
10Masayoshi Son founder&CEO Taobaosearching for treasuresA local college English teacherno knowledge of computersStep down on May 10, 2013Jack MaFounder & CEOthe leading B2B website in China.Alibaba.com B2B in 1999Softbank CapitalMasayoshi Son founder&CEOTaobao.com C2Cheaded by Tongyu Suninvest $12 million in 2003defeated eBay
13Why Taobao took over eBay China? Taobao has an embedded competitive advantage to transform a better understanding of the national culture into an organizational culture.Organizational culture has significant impact on the competitive strategies and market performance.
14National culture in China Business deals had often been negotiated face-to-faceGuaranteed by individual reputations,Financial transactions had relied on cash based systemsNo credit infrastructure at the individual level
15Different Organizational Culture eBay ChinaTaobaoWholly owned subsidiary of eBayChinese C2C websiteResembles its American parent in many waysthe popular Chinese martial art subculture.Six core valuesshop servant
16Difference operation styles eBayTaobaoCommunicationHierarchy and indirectDirect communicationsEmployeesHighly educated&experienceProfessional eliteHighly motivated college graduatesConsider each other as sisters and brothersExecutiveswestern educatedHired from all over the worldLocal college graduatesMostly promoted inside the co.
17Difference operation styles eBayTaobaoOperational strategyIntegrated China operation into eBay global platformImplemented corporate policies and proceduresImprovised and experienced basedadapted quickly based on market and technology environmentDecision makingCentralized and analyticalDecentralized and semi-analyticalCustomersTreated as external entitiesTreated as part of the companyAttitude toward mediaNegativeAvoid if possiblePositiveEmbrace and take advantage of
18Competing for Customers eBay ChinaTaobaoinvest heavily in its marketing campaigns in Chinaswitched to the “ants’ way.”sign exclusive contracts with almost all the major Chinese websites.posted thousands of messages to bulletin board services (BBS)emphasis on quality servicelaunched with an entirely no-fee modelused the category structure set by eBay’s global platform.designed its categories in accordance with the typical structure of a Chinese department storefoster a sense of community on its website,setting up online forumsencourage interaction b/w sellers&buyers.integrated an instant messaging serviceLess informal and friendlyMore informal and friendlyeBay China’s usersTaobao
19Competing in Payment Services eBay ChinasimilarAn Fu TongPayPalConfused An Fu Tong &PayPalTransaction system had erredgrowing slowlyTaobaooffersAliPayescrow servicesdelivery of transacted merchandisecustomized services at discounted prices to users of AliPayrapidly being adopted
20Competing for Partnerships eBaynearly all the major websites in ChinaGlobal ResourcesTom.com (Hong Kong based)TaobaoSohu portal websitesMSN China (Microsoft's portal)
21The Problem of Counterfeit Merchandise the market was flooded with counterfeit merchandise (clothing and accessories).Few buyers complained70% of C2C sales were of counterfeits in clothing and accessories.In China, no online service providers are responsible for damages due to counterfeiting.raised a serious dilemma for eBay corporateIn 2007, LVMH sued Taobao, lead to an agreement.in 2008, LVMH sued eBay in a Paris court, it won the case.
22Why did eBay China’s performance continue to decline? eBay’s global decision-making processes severely dragged down the speed of decision making in its China operation.Centralization harmed eBay China’s technical performance.Frequently change eBay China’s leadership. (3 CEOs w/n 2 Yrs)Relies on professional market research reports and dataTreated customers as external entitiesNegative attitude toward media
23Solutions for multinational firms Localizing top management teamFast decision making with decentralized power structureAdopt a positive attitude toward media and social networkingPartnership with strong localsGrow market first and profit from it later
24Is Taobao a Profitable Company? constant pressure to generate revenuepromise to offer all services free for three more yearsIn May 2006, offered a fee-based service & suspended a month later.Alibaba.com Inc. support three more years’ fully free services on Taobao.com
25Questions Which one is the decision making process for eBay? A. DecentralizationB. CentralizationAnswer: B
26Questions 2. What is the payment system of Tao bao? Paypal An Fu Tong AlipayAliwangwangAnswer: C
27Questions3. What is the % on sales of counterfeits in clothing and accessories. A. 50% B. 60% C. 70% D. 80%Answer: C