Asia represents a very important and profitable market for many companies.
It is not
unusual for many companies to draw major profits from their overseas operations.
So, why does
eBay have problems in its Asian Markets?
As a wholly-owned subsidiary, the venture of breaking into the Asian markets was costly
and risky for eBay.
eBay acquired the Chinese online auction company EachNet for an initial
investment of $30 million in 2002 and finished the acquisition with another $150 million in
In Korea, the eBay also bought the Internet Auction Co. for a total of $502 million by
They even invested $100 million in 2005 to further its ambitions in China.
eBay's subsidiary, Internet Auction Co., maintained top sales in Korea.
However, by 2006, new
local competitors have emerged.
In China, Alibaba.com's TaoBao and in South Korea, local competitor Gmarket have
taken the reigns.
In fact, eBay's subsidiary in Korea, Internet Auction, now lags behind
GMarket, where Yahoo has been a major investor for cash flow, further challenging E-Bay shares
of the Korean market.
Even in China, Yahoo has 40% of TaoBao company stocks.
Strategic Alliance has created a financial challenge for eBay to try and outpace.
and Yahoo have an alliance in the US market to keep the upper hand over another rival, Google,
in the Asia market, eBay and Yahoo are ferocious rivals.
As a tribute to their poor timing, eBay
entered this market late behind rival Yahoo in exploiting the lucrative Japanese online-auction
market, which eBay eventually left in 2002.
Competition is a major factor affecting eBay's
ability to set a competitive price for their services rendered in these online auctions.
When looking at the marketing strategy of the marketing mix factors, GMarket offers
more convenience of use as a product of service, where it offers goods at fixed prices, with an