EBay Says Tom Online Deal Is Not a 'Pullback' From China
online.wsj.com
By VAUHINI VARA
December 19, 2006 8:37 p.m.
EBay Inc.'s decision to replace its main Web site in China with a new one run mostly by Beijing-based Tom Online Inc. doesn't represent a pullback in eBay's commitment to China, eBay chief executive Meg Whitman said in an interview Tuesday.
"Nothing has changed in terms of our belief in the Chinese market," said Ms. Whitman. "We are really proud of how we have helped pioneer e-commerce here. But as we looked at the landscape, we thought, 'Some things are changing, and local expertise is going to be important.'"
Late Tuesday, eBay announced that it is taking a 49% stake in the new Chinese site in partnership with Tom Online, which would hold the other 51%. The new Tom-eBay Chinese Web site will launch in 2007. EBay, which will shut down its existing main Chinese Web site, will still maintain its own site for "cross border" trading, for Chinese users who are selling to buyers outside of China.
Ms. Whitman said certain regulatory differences in China and the relative newness of the Internet there are among the things that convinced eBay that it would fare better by partnering with a local company. She said Tom, in particular, has an expertise in the mobile arena that attracted eBay, as it tries to expand onto new platforms.
"We remain incredibly committed to China," Ms. Whitman added. "I think it'll be a very big market for us. That said, it is a unique market. It's a fast-growing developing company that's changing more rapidly than probably any other country."
When eBay entered the Chinese market in 2002, it decided to move its new Web site there to eBay's standard technology platform, rather than using the platform from EachNet, a local company that it ended up acquiring in 2003. It also centralized much of its engineering decision-making in the U.S., rather than in China, which made it difficult to quickly push through necessary engineering changes, say people familiar with the matter. Meanwhile, local rival Alibaba.com Corp.'s TaoBao was able to adapt more quickly and with less bureaucracy to changes in the local market, these people say.
"We recognize that the migration to the global eBay trading platform set us back at a time that our competition was gaining ground," Ms. Whitman said. "We have done this in many markets around the world, and it happened seamlessly. This time, we ran into a strong and nimble competitor." |
