Finding Success in China: Lessons Learned from eBay

After Google’s high profile exit from China last year, the feat of successfully penetrating the Chinese market as a foreign internet company appears even more daunting. After Businessweek recently featured online marketplace eBay and its experience in the Middle Kingdom, we wanted to highlight some of the things it did right.

When eBay was struggling to make it in China, various strategies were adopted to attract consumers in the country. eBay successfully ran its business strategy by entering market segments that were not dominated by local companies such as Taobao. Instead, eBay targeted small exporters in China who are in search of consumers abroad. Given its international presence, eBay has certainly played to its strength.

It was through this strategy that eBay finally edged into the Chinese market again. In 2010 the company and its PayPal unit managed to hit $4 billion worth of transactions in China and Hong Kong, which made China the fifth largest market for eBay after the U.S., Germany, Britain, and South Korea.

China, a tough market

Difficulties faced by foreign Internet companies in the Chinese market are partly due to restrictions from the Chinese government on business and online activities. eBay’s senior vice-president and managing director for Asia Pacific, Jay Lee said that although it is very difficult to compete with local firms, “China is very important, [and] we needed a different way to approach the market.” His sentiment was also similar to Robin Li, CEO at Baidu.

In fact, a similar strategy was adopted by Google when it entered China too. When Baidu was leading in local ad sales, Google helped exporters to expand their businesses through its international presence.

Developing countries which currently have a growing network of online trading (such as Indonesia) could be the next potential target for internet companies. As e-commerce develops, we expect eBay to continue its success, mastering the Asian market.

Photo: danwei.org