eBay, a company that introduced its products to the Chinese market in 2002, expected much success when it launched its website for the Chinese people that same year. At first, the adaptation of the business model seemed successful, and they hoped to gain as much as they were gaining across the world. For that reason, they did not do any form of a feasibility study to get to know the cultural differences and the real needs of the potential customers on the ground. Their assumptions due to the global experience did not allow them to understand customer preferences and specificity of the Chinese market. The businesses required small transaction fees that could cater to listing any sale that could occur between customers to the customer through the website. Notably, consumers used EBay in most cases to buy commodities directly from the outlets or shops. However, people did not use customers to customer businesses to buy partially used products because customers felt that small size business would suggest relatively cheap products to them.
The failure of eBay in the Chinese market did not occur due to the type of goods the company offered because it acted as an online platform for customers to choose a variety of commodities. However, the nature of services that the company was offering had little preference for the consumer because it was not the right place to acquired used products. The failure of this company majorly came from the environmental factors considering its management consisted of foreigners.
The company failed to consider the ethical diversity of the Chinese people because it did not recognize the difference that the Chinese business environment would have compared to other markets. Considering managing staff that came from Germany and the United States, there were several language barrier cases and total misunderstanding on the local market. Taobao, a company considered to be the closest competitor at that time, had top Chinese management opted to hire Chinese people to handle most of the business activities (Li et al. 57). They eyed a group of employees that would understand the dynamics and cultural preferences in the Chinese market. Beginning from the name of the company, which held a significant meaning that the Chinese people perceived to be digging for the treasure, the strategies of the company made it succeed. However, much eBay tried by adopting a Chinese name in the attempts of reviving its efforts to survive; the name did not catch the attention of the Chinese market for the case of Taobao.
The economic structure of China gave many businesses an enabling environment for success in its diverse market. China gave both local and international companies a free entry mode of business operations, and that was the first indication that with the population of the Chinese people, businesses would do well. For this reason, it is the management that saw the failure of this company in the Chinese market. As earlier mentioned, having top management as foreigners who did not understand the dynamism of the local market and the needs of the Chinese people, the business did not succeed.
In conclusion, the reputation of a brand is quite essential and can have a severe impact on any business in the Chinese market. One of the reasons why eBay had to fail in China is that its brand would not move the masses as it did in countries like the United States. Moreover, the strategies that the management used to sell the company in China was not the right one, and therefore it could not succeed when competitors were doing better.
Li, Dahui, Jun Li, and Zhangxi Lin. "Online consumer-to-consumer market in China-a comparative study of Taobao and eBay." Electronic Commerce Research and Applications 7.1 (2008): 55-67.
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