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Tao Bao
EBay China
By Ying Wang
TaoBao vs.EBay China
EachNet
EBay China
Tao Bao
Launch
www.ebay.cn
%
90
60
30
EBay acquired
EachNet
Tao Bao
founded by Chinese
entrepreneurs Bo
Shao and Haiyin Tan
EBay
China
eachnet.com
1999
2000
2001
2002
2003
2004
2006
2008
EachNet
Issues
Strategic Decisions
reluctance to complete transactions online
Lack of trust
lack of an efficient delivery system
1999 trading booths in each city, bust costly
create a cash-on-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.
servers
listing
categorization
centralized to eBay
headquarters in U.S
Website
maintenance
interface styles
technologies
http://www.ebay.cn/
pricing
http://www.eachnet.com/
searching for treasures
• A local college English
teacher
• no knowledge of computers
• Step down on May 10, 2013
the leading B2B
website in China.
Softbank Capital
Masayoshi Son founder&CEO
Taobao
Jack Ma
Founder & CEO
Alibaba.com B2B in 1999
Taobao.com C2C
headed by Tongyu Sun
invest $12 million in 2003
http://www.taobao.com/index_global.php
defeated
eBay
http://s.taobao.com/search?q=shoes&keyword=&commend=all&ssid=s5e&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
Operational • Integrated China operation
strategy
into eBay global platform
• Implemented corporate
policies and procedures
Taobao
• 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
eBay China’s users
used the category structure set by
eBay’s global platform.
Taobao
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
Competing in Payment Services
eBay China
An Fu Tong
PayPal
similar
• 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
Partners
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
1. Which one is the decision making process for
eBay?
A. Decentralization
B. Centralization
Questions
2. What is the payment system of Tao bao?
A. Paypal
B. An Fu Tong
C. Alipay
D. Aliwangwang
Questions
3. What is the % on sales of counterfeits in
clothing and accessories.
A. 50%
B. 60%
C. 70%
D. 80%
Cited Page
• http://www.ebay.cn
• http://www.eachnet.com
• http://www.baidu.com/s?ie=utf8&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=utf8&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_s
ug4=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
• http://www.baidu.com/s?ie=utf8&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
Thank You