eBay "Plan B's" China...

As predicted in early November at eBay Strategies, eBay has retreated to some degree in China according to reports from Fortune, WSJ and others. The plan is for eBay to partner with Tom Online to launch an entirely new auction site. eBay would own 49% of the JV and TOMO the other 51%. Reviewing the stock analyst reports on this news they are mostly positive. The thinking goes that eBay still has a foot in China and can continue to operate there with a strong partner. This is the approach Y! has taken in Japan (that crushed eBay) and also in China (with Taobao which has crushed eBay) and Korea (with Gmarket that is hurting eBay). So it is interesting to see eBay finally adopt what has clearly been the winning strategy pioneered by Yahoo! finally. The big question is will it be too little too late? With Eachnet at 30% share and falling, this transition is sure to lose some more market share.

Also, I always hear from eBay sellers that feel as if their very high eBay fees are going elsewhere (Skype+China are the usual examples). So I thought it would be interesting to review the eBay investment in China thus far. Here's what I come up with:

2003 Eachnet investment - $30m
2004 Eachnet acquisition - $150m
2005 Investment - $100m
2006 Investment - $50-100m
2006/07 TOMO investment for JV - $40m

Investment to date in China: $370m-$420m

That $370m-$420m sure could have made a lot of site improvements in the US and European markets that are growing, or paid for tons of new buyers, etc.

I guess the good news is that with the recent re-org and changes eBay is making, they DO seem to be focusing away from Skype+China side-bar kind of activities and instead are getting back to basics. I just worry that the 05/06 opportunities they missed out on due to these distractions may take 2-3 yrs to turn around.

http://ebaystrategies.blogs.com/ebay_strategies/2006/12/ebay_plan_bs_ch.html