RMIT International University Vietnam

BUSM 3311 – International Business

Preparation for A1

Subject Code:
BUSM-3311

Subject Name: International Business

Location & Campus RMIT Hanoi

Class Group Number: 2

Student Name: Vu Thuy Trang

Student Number: s3636108

Your Teacher: John Walsh

Script Word Count: 407

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 The failure of eBay in expanding to the Chinese market.
Question A.

In 2004, the leading American ecommerce site eBay entered the Chinese market by buying
EachNet, Chinese most dominant auction player with an 85% market share in China. The entry
to Chinese market seemed very promising as the only competitor was a small local company
Alibaba. However, eBay failed to take in consideration the cultural differences and nature of the
Chinese market, they applied the same business model in China that they were using across the
world as it was a successful one. Alibaba, on the other hand, knowing that China’s business
environment is very complex, launched Taobao in order to compete with eBay. Alibaba had a
deep understanding of its culture, hence, unlike eBay, Taobao was customer-centric and offered
fee-free policy for the first three years. Moreover, they did not underestimate the importance of
“guanxi” which means personal bonds, so Taobao’s platform offered sellers and buyers to chat
and get to know each other. By 2006 Taobao took over 90% of China’s market share forcing
eBay to leave the Chinese market. Hence, lack of a deep understanding of the Chinese market
lead eBay to the failure to cope with the extremely fierce competition in China.

Question B.

In A1 assignment I will discuss the failure of eBay to internationally expand to China due to a
lack of a deep understanding of the Chinese culture and complex local business environment.
Therefore, in my opinion, Topics 2, 3, 4 of this course will be useful in my discussion as the
theory from these topics address the issues of internationalization and political, economic and
cultural factors.

Question C.

This case of eBay in China caught my attention due to two reasons. Firstly, eBay is one of the
leading American digital firms that has successfully internationally expanded to many countries
around the world. Secondly, China is one of the largest digital markets in the world, however,
many leading Western digital firms, such as eBay, Google, Uber have failed. Hence, by
analysing this case I can recognize and understand the main issues of the possible failure of big
companies in the process of internationalisation to foreign market.
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