|Tue Sept 26 2006 13:19:43|
Competitor Comments on eBay China Rumors
By: Ina Steiner
Today AuctionBytes reported on published rumors that eBay is considering selling its China operations or looking for a local partner. eBay spokesperson Catherine England said the company does not comment on rumors or speculation, but said, "As you know, we are constantly evaluating our businesses to ensure we are operating as effectively as possible given local market dynamics and the needs of our local communities."
eBay has been battling with Chinese auction site Alibaba.com, not only in terms of the marketplace, but on the public relations front as well. So it's not surprising that Alibaba was willing to comment on the rumors and put forth its own spin on what is happening in the China auction space.
In an email interview, Alibaba's Vice President of International Marketing Porter Erisman said he had been hearing for months from sources that eBay has been shopping its China operations around to various local Internet companies. "The real source of Ebay's woes in Asia is its inability to understand local market conditions in this part of the world."
As for the two companies rumored to be in talks with eBay, Erisman said, "Tencent and Tom.com are good at what they do, but they are not e-commerce companies."
Not surprisingly, Erisman said he believes a sale to a local partner would help his company's Taobao marketplace: "eBay's headquarters will probably find that the only thing more difficult than coordinating with their current China team is coordinating with their new local partner."
The full interview with Erisman is posted on the AuctionBytes blog.
*AB: Do you have any insight into whether the rumors regarding eBay in China have any basis?*
Erisman: We've been hearing for months from good sources that Ebay has been shopping its China operations around to various local Internet companies. They seem to be looking for a way to make a dignified withdrawal from China. We agree with Ebay's assertion that "whoever wins in China, will win the world" and we believe that Ebay's withdrawal from China is inevitable.
*AB: If eBay does make an acquisition or sell Eachnet, is it a reaction to competitive market forces? What is the competitive landscape?*
Erisman: We doubt Ebay will buy a local company - doing so would only sink them deeper into their China quagmire. If Ebay sells their China operations to a local company, it would simply be a way to disguise their withdrawal from the market, similar to the way they managed their withdrawal from Taiwan.
The real reason Ebay is shopping around its China operations is because of its continued inability to understand the China customer. In fact, it is a problem that Ebay has had throughout Asia. For a long time, Ebay was able to explain away its loss of Japan by attributing the loss to the fact that it did not have first-mover advantage. However, the real source of Ebay's woes in Asia is its inability to understand local market conditions in this part of the world, which is why Ebay lost Japan, lost Taiwan, lost Hong Kong, lost China and is losing its only remaining stronghold - Korea.
*AB: What would a merger between eBay Eachnet and Tencent or Tom.com mean for
Alibaba & Taobao?*
Erisman: Tencent and Tom.com are good at what they do, but they are not e-commerce companies. Alibaba and Taobao have been building e-commerce marketplaces in China for seven years. E-commerce is in our DNA. Partnering with a local company that doesn't understand e-commerce would only prolong Ebay's suffering in China. If Ebay sells off its business to a local partner, it would only help Taobao extend its lead in China while Ebay works out the integration issues with its local partner. Ebay's headquarters will probably find that the only thing more difficult than coordinating with their current China team is coordinating with their new local partner.