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Internationl Strategy

Essay by   •  January 11, 2011  •  810 Words (4 Pages)  •  868 Views

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Since 2001E-Bay has tried to globalize and expand its online business in the Asian market, and have failed each time. The online company failed, because they failed to do their research on the foreign market that they were about to enter. E-Bay didn’t get to know their competition, and entered the market without knowing what they were getting into. The company should have found out what worked in the local market, and what made the local competition so successful. The company failed to learn their consumers, they should have found out their consumers likes and dislikes were what the consumers were willing to spend money on, and what they were not willing to spend money on. These critical mistakes made E-Bay unmarketable to the Asian economy, and would eventually lead to EBay’s failure in the Asian market.

I will prove why E-Bay failed in the Asian market, by discussing the mistakes the company made in the beginning of their campaign, that left the Chinese consumers not trusting the company, and only wanting to do business with their local market, and the companies they trusted.

E-Baby made a crucial mistake, when the company didn’t take the time to get to know their competition; this made it impossible for the company to compete with local competitor Taobao. Taobao is the local online competition that offers services just like E-bay, but only their services catered more to the local market. Taobao offered free basic services to sellers, while E-Bay initially charged listing fees, as it did in the United States, and Europe. Many critics believe that Chinese consumers will always choose the free or low cost option unless the product is tangible. These mistakes could have been avoided if E-Bay would have taken a little time and effort to do their research, and cater to the host Country.

When eBay entered China, the company brought their American tactics, and made a critical mistake by thinking the business would strive as it has done in the US. the company didn’t even try to compete with the local competition; E-Bay used the PayPal payment method that didn’t integrate escrow into the sales process; while the competitors Alipay, made escrow an important part of their online buying experience, meaning that consumers felt confident paying money to Alipay, and then only releasing the money after they had their purchase in-hand; whereas PayPal you pay the money up front, and then your product will be shipped to you as is.

E-Bay’s failure can also be contributed to the fact that the Chinese people didn’t trust the company. In China trust is very important, because of the weak legal system, and the more formal means of settling disputes. Companies need to provide security every step of the way during sales transaction, and make consumers feel comfortable making their purchases. E-Bay failed to do this when they first entered

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