Why Does Ebay Have Problems in Its Asian Market?
Why does E-Bay have problems in its Asian Markets? TUI University
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Module 1
BUS 401
Introduction to International Business & Global Marketing
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18 April 2008
There are several reasons why EBay failed trying to enter and get a foothold into the Asian Markets. American companies as a whole have had difficulties trying to get into the Asian Global market beginning in the year 2000. The biggest reason is our cultural differences. EBay was an outsider and did not understand the cultural market there. By understanding our cultural differences we will understand why EBay was unable to successfully enter the Asian market.
The main concept is a word, Guānxi . Guānxi describes the basic dynamic in personalized networks of influence, and is a central concept in Chinese society. At its most basic, Guānxi describes a personal connection between two people in which one is able to prevail upon another to perform a favor or service, or be prevailed upon. (Ansfield, 20047) Chinese companies are winning because they understand the market better and the power of Guānxi. A foreign company will never have the Guānxi of a Chinese one. Period.
Guānxi also goes hand in hand with corruption. China is the most corrupt place (next to Africa) in the world. Ebay just does not know how to use Guānxi or bribe the correct officials to get into the game. No other place in the world can you observe Government officials driving around with their mistresses in expensive cars next to peasant farmers pulling donkey carts on the 4th ring road of Beijing. If you want to get into anything in China, pay out enough bribes to officials to get the market share you need to lead. It’s very short term, but it may give you the advantage
The internet in Asia is basically controlled by two companies, Alibaba, and Tom Online. EBay went into the venture trying to do the normal American thing of dominating and taking over. There are several ways to get into an
XXXXXXXX
Module 1
BUS 401
Introduction to International Business & Global Marketing
XXXXXXXX
18 April 2008
There are several reasons why EBay failed trying to enter and get a foothold into the Asian Markets. American companies as a whole have had difficulties trying to get into the Asian Global market beginning in the year 2000. The biggest reason is our cultural differences. EBay was an outsider and did not understand the cultural market there. By understanding our cultural differences we will understand why EBay was unable to successfully enter the Asian market.
The main concept is a word, Guānxi . Guānxi describes the basic dynamic in personalized networks of influence, and is a central concept in Chinese society. At its most basic, Guānxi describes a personal connection between two people in which one is able to prevail upon another to perform a favor or service, or be prevailed upon. (Ansfield, 20047) Chinese companies are winning because they understand the market better and the power of Guānxi. A foreign company will never have the Guānxi of a Chinese one. Period.
Guānxi also goes hand in hand with corruption. China is the most corrupt place (next to Africa) in the world. Ebay just does not know how to use Guānxi or bribe the correct officials to get into the game. No other place in the world can you observe Government officials driving around with their mistresses in expensive cars next to peasant farmers pulling donkey carts on the 4th ring road of Beijing. If you want to get into anything in China, pay out enough bribes to officials to get the market share you need to lead. It’s very short term, but it may give you the advantage
The internet in Asia is basically controlled by two companies, Alibaba, and Tom Online. EBay went into the venture trying to do the normal American thing of dominating and taking over. There are several ways to get into an
References: Ansfield, J. (20047, December 17). Where "Guanxi" Rules. Retrieved April 12, 2008, from www.Newsweek.com: http://www.newsweek.com/id/74369 Ebay. (n.d.). About Ebay. Retrieved 04 11, 2008, from http://www.ebay.com: http://pages.ebay.com/aboutebay.html?_trksid=m40 French, K. B. (2006, Dec 19). Businesse. Retrieved 04 09, 2008, from International Herald Tribune: http://www.iht.com/articles/2006/12/19/business/ebay.php Holmes, S. (2005, March 8). Home page. Retrieved April 8, 2008, from http://www.businessweek.com: http://www.businessweek.com/bwdaily/dnflash/mar2005/nf2005038_5360_db035.htm