The joint venture with Tom Online will allow eBay to enter the Chinese rapidly growing market. In 2007, China experienced a technology boom in which more people were using the Internet than ever before. Besides the rocket increase of Internet usage in China, E-Commerce is growing as well. With the power and influence of Tom Online, eBay has a unique opportunity to grab the market share of a billion people in China. EBay can benefit a lot from the joint venture with Tom online. Tom Online will help eBay reach millions of people through Internet as well as the mobile Internet. Graph 1 shows that China experienced an exponentially growing in Internet usage. From 2005 to 2007, the Internet users in China doubled from 111million to 205 million. The big population of China almost guaranteed Internet usage growth.
With the increase of Internet usage in China, the online shopping also grows rapidly. According to graph 2, online transaction value in China jumped from 3.9 billion RMB to 23.1 billon, representing an incredible growth rate of 253%. All the statistics above strongly prove that China is the perfect market for eBay to tap into. In addition to the great potentials of the market of China, the new marketplace will bring together the strengths of both companies. EBay EachNet’s global e-commerce knowledge and large and active trading community in China, and TOM Online’s local market knowledge and active wireless user base of more than 75 million. The new marketplace will bring enhanced online and mobile opportunities to buyers and sellers in China, evolving eBay’s participation in China and extending TOM Online’s wireless service portfolio into m-commerce. Upon the launch of the new marketplace, eBay EachNet users will be invited to transition to the new site, and TOM Online will work to deliver its user traffic to the site as well.
On the other hand, it is also risky for ebay to form the joint venture with Tom Online. EBay must pay close attention to Tom Online and their strategy in the market. Instead of eBay, it is Tom Online that has the majority share in Tom EachNet at 51%. EBay has injected over $40 million into Tom EachNet, while Tom Online only contributed $20 million (along with knowledge, technology, and brand value). It is clear that eBay has more to lose in the deal, while Tom Online is simply negotiating their presence in China. EBay must work closely with Tom Online to ensure that their visions for Tom EachNet are similar, and a common strategy is taken to succeed. China’s business culture is another obstacle that eBay must monitor closely. Tom Online does have extremely well connection with the Chinese government, and eBay must be sure to take advantage of the TOM Online’s political networks in China. .