EBay Inc. (EBAY) realizes China's fast-growing online auction market is very enticing although not so easy to break into. They have decided to shut its main Web site, after spending hundreds of millions of dollars trying to establish a China presence, and enter into a joint venture with a Chinese company instead.
The plan is for eBay to put $40 million into the yet-as-unnamed venture with Tom Online Inc., an Internet company based in Beijing, with eBay holdiing a 49 percent stake. Tom Online will add their own $20 million to the venture.
The move is a sign of the pressure that has been put to bear on foreign companies to set up joint ventures in China, even though many have reservations about doing so based upon the fear that they might turn out to be global rivals.
According to this NYTimes.com article, just last year Meg Whitman, eBay's chief executive, boasted that China was eBay's biggest long-term opportunity in local markets. The began establishing themselves in 2002, when they moved from Japan to China in a concession to Yahoo's (YHOO) large lead there.
Yahoo saw its own trouble in China and paid $1 billion to hand over operations to Alibaba, China's largest e-commerce company, in exchange for a 40 percent stake in the company.
Read the full article here.
» eBay: How To Fail In China 101 -- What's Politics Got To Do With It? from China Law Blog
By now, most of you know what has happened to eBay in China: they tanked. They came in woefully unprepared, spent a lot of money, and now they are essentially gone. But in a classic example of Western face saving [Read More]
Tracked on: December 24, 2006 1:48 PM | Permalink to Trackback