Tao Bao EBay China By Ying Wang

TaoBao vs.EBay China EachNet EBay China Tao Bao Launch www.ebay.cn % 90 EBay acquired EachNet Tao Bao founded by Chinese entrepreneurs Bo Shao and Haiyin Tan 60 EBay China 30 eachnet.com 1999 2000 2001 2002 2003 2004 2006 2008

EachNet Issues Strategic Decisions reluctance to complete transactions online 1999 trading booths in each city, bust costly Lack of trust create a cash-on-delivery system lack of an efficient delivery system partner with the four largest banks in China Process payments offered escrow service &PayPal-like service Difficultly raise capital 2000 charge listing fees to sellers online fraud 2001 a user rating system conduct investigations & punish cheaters Real Name Program for user registration.

eBay 1995 founded by an engineer named Pierre Omidyar 1998 eBay went public on NASDAQ 1999 Launch websites in Germany, U.K, Australia 2000 Launch websites in Japan, Canada, France, Taiwan and Austria 2001 expanded to 17 markets &had spent more than $1.6 billion on acquisitions 2002 Exited Japan & acquired EachNet 2003 James (Xigui) Zheng joined EachNet as its CFO. 2006 Established a new joint venture with TOM to operate C2C business 2007 Rank the 3rd in the C2C online market EachNet was entirely cut off from eBay’s global platform

eBay’s Global Strategy and Organization Changes in eBay China EachNet’s leaders platform eBay Asia. centralized to eBay headquarters in U.S listing categorization servers Website maintenance interface styles technologies pricing http://www.ebay.cn/ http://www.eachnet.com/

Masayoshi Son founder&CEO Taobao searching for treasures A local college English teacher no knowledge of computers Step down on May 10, 2013 Jack Ma Founder & CEO the leading B2B website in China. Alibaba.com B2B in 1999 Softbank Capital Masayoshi Son founder&CEO Taobao.com C2C headed by Tongyu Sun invest $12 million in 2003 defeated eBay http://www.taobao.com/index_global.php

http://s. taobao. com/search http://s.taobao.com/search?q=shoes&keyword=&commend=all&ssid=s5-e&search_type=item&atype=&tracelog=&sourceId=tb.index&rt=1369084842133&source=haiwaigou&pid=mm_14507416_2297358_8935934&unid=

Why 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.

National culture in China Business deals had often been negotiated face-to-face Guaranteed by individual reputations, Financial transactions had relied on cash based systems No credit infrastructure at the individual level

Different Organizational Culture eBay China Taobao Wholly owned subsidiary of eBay Chinese C2C website Resembles its American parent in many ways the popular Chinese martial art subculture. Six core values shop servant

Difference operation styles eBay Taobao Communication Hierarchy and indirect Direct communications Employees Highly educated&experience Professional elite Highly motivated college graduates Consider each other as sisters and brothers Executives western educated Hired from all over the world Local college graduates Mostly promoted inside the co.

Difference operation styles eBay Taobao Operational strategy Integrated China operation into eBay global platform Implemented corporate policies and procedures Improvised and experienced based adapted quickly based on market and technology environment Decision making Centralized and analytical Decentralized and semi-analytical Customers Treated as external entities Treated as part of the company Attitude toward media Negative Avoid if possible Positive Embrace and take advantage of

Competing for Customers eBay China Taobao invest heavily in its marketing campaigns in China switched 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 service launched with an entirely no-fee model used the category structure set by eBay’s global platform. designed its categories in accordance with the typical structure of a Chinese department store foster a sense of community on its website, setting up online forums encourage interaction b/w sellers&buyers. integrated an instant messaging service Less informal and friendly More informal and friendly eBay China’s users Taobao

Competing in Payment Services eBay China similar An Fu Tong PayPal Confused An Fu Tong &PayPal Transaction system had erred growing slowly Taobao offers AliPay escrow services delivery of transacted merchandise customized services at discounted prices to users of AliPay rapidly being adopted

Competing for Partnerships eBay nearly all the major websites in China Global Resources Tom.com (Hong Kong based) Taobao Sohu portal websites MSN China (Microsoft's portal)

The Problem of Counterfeit Merchandise the market was flooded with counterfeit merchandise (clothing and accessories). Few buyers complained 70% 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 corporate In 2007, LVMH sued Taobao, lead to an agreement. in 2008, LVMH sued eBay in a Paris court, it won the case.

Why 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 data Treated customers as external entities Negative attitude toward media

Solutions for multinational firms Localizing top management team Fast decision making with decentralized power structure Adopt a positive attitude toward media and social networking Partnership with strong locals Grow market first and profit from it later

Is Taobao a Profitable Company? constant pressure to generate revenue promise to offer all services free for three more years In May 2006, offered a fee-based service & suspended a month later. Alibaba.com Inc. support three more years’ fully free services on Taobao.com

Questions Which one is the decision making process for eBay? A. Decentralization B. Centralization Answer: B

Questions 2. What is the payment system of Tao bao? Paypal An Fu Tong Alipay Aliwangwang Answer: C

Questions 3. What is the % on sales of counterfeits in clothing and accessories. A. 50% B. 60% C. 70% D. 80% Answer: C

Cited Page http://www.ebay.cn http://www.eachnet.com http://www.baidu.com/s?ie=utf-8&bs=Tongyu+Sun&f=3&rsv_bp=1&rsv_spt=3&wd=%E5%AD%99%E5%BD%A4%E5%AE%87&rsv_sug3=2&rsv_sug=0&rsv_sug1=2&rsv_sug4=533&oq=SunTongyu+&rsp=0&rsv_sug2=1&rsv_sug5=0&inputT=2849 http://www.baidu.com/s?ie=utf-8&bs=%E5%AD%99%E5%BD%A4%E5%AE%87&f=3&rsv_bp=1&rsv_spt=3&wd=%E9%A9%AC%E4%BA%91&rsv_sug3=5&rsv_sug=0&rsv_sug1=2&rsv_sug4=1122&oq=mayun&rsp=0&rsv_sug2=1&rsv_sug5=0&inputT=3644 http://tech.sina.com.cn/i/2013-05-10/01188323836.shtml http://www.omidyar.com/team/pierre-omidyar

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