eBay's Strategy in China: Alliance or Acquisition Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

In December 2006, eBay, Inc, an US firm that offers e commerce, e-payments and internet communication services globally, announced its plan to form a joint venture with China-based online portal and wireless operator, TOM Online, that would give each firm 49% and 51% ownership, respectively. This was the third strategic move in China of eBay, following its acquisition of a 33% stake in domestic counterpart EachNet in 2002 that indicated its entry into the marketplace, and a full acquisition in 2003. To local rival and Alibaba's fully-owned subsidiary company-TaoBao, eBay had been losing market share despite the first good results.

While TaoBao's continued to grow, reaching 60% by 2006, eBay had seen its market share drop from a high of 85% to a staggering 29%. The joint venture was thus an effort by eBay to save its failing Chinese operations. The move also represented the growing issues foreign internet companies were facing in China because of cutthroat competition and a changing market environment. EBay believed that it would profit from TOM Online's local knowledge and political links. Nevertheless, some analysts questioned whether political links were the response and indicated that eBay focus on its product and service offerings instead. How could eBay leverage the joint venture to its success in China? What options did eBay have for enhancing its strategic position in the Chinese market?

PUBLICATION DATE: November 27, 2007 PRODUCT #: HKU701-PDF-ENG

This is just an excerpt. This case is about GLOBAL BUSINESS