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A cross-cultural analysis about
the Failure of eBay in China
NAWATAT SUWANSINPAN
150239291
MENGXIN LIU
160017582
PENG LIU 

160011616
XINMIAO LIANG 

160507290
Team Introduction
Agenda
• Chinese	market	is	not	dangerous	
• eBay	and	Taobao	
• The	failure	of	eBay	in	Chinese	market	
• An	analysis	of	the...
Chinese market is not dangerous
• Not	all	multinational	companies	failed	in	China	
• In	general,	China	is	open	towards	Wes...
• First	launched	to	public	in	March	1998	
• Online	auction	and	shopping	website		
• People	buy	and	sale	a	variety	of	produ...
• Local	compe9tor	
• Online	shopping	website	
• Taobao	was	launched	in	April	2003	
• Integrated	Chinese	cultures	into	busi...
Time Frame
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Alibaba was
established
EachNet was
founded
eBay went in Chin...
Market Shares
Source: Standard Graduate School of Business (2010); Taobao vs. Ebay China, p.17
MarketShare
“eBay used the same strategy
successfully across the world but not
in China. This is a lack of cultural
understanding of e...
eBay could not understand
Chinese consumer characteristics.
Markets in China
Markets in China
Markets in the US
Markets in the US
Shopping Behaviour in Supermarkets
Chinese
Speaking
customers
English
Speaking
customers
The table adapted from: Ackerman ...
Chinese
Speaking
customers
English
Speaking
customers
The table adapted from: Ackerman and Tellis 2001: 57–82
Shopping Beh...
Markets in China and the US
• Lengthy-conversa9on	
• More-interac9on	
• Price	can	be	nego9ated	
• More-selec9ve
• Short-co...
Markets in China and the US
• Lengthy-conversa9on	
• More-interac9on	
• Price	can	be	nego9ated	
• More-selec9ve	
• Shoppin...
Dependent Chinese and
Independent Americans
• tend	to	rely	upon	others	
• retain	a	close	rela9onship	
with	people	around	t...
eBay did not allow buyers to
communicate with sellers easily.
eBay’s user interface
Screenshot from: http://www.aboutdm.com
Taobao’s user interface
Screenshot from: http://dodri0.tumblr.com/post/101239021220/how-to-use-aliwangwang-to-chat-with-ta...
Taobao’s user interface
Screenshot from: http://dodri0.tumblr.com/post/101239021220/how-to-use-aliwangwang-to-chat-with-ta...
A comparison of two website features
• Product	photos	
• Product	descrip9on	
• User	reviews	and	Comments
• Product	photos	...
Pattern of communication
• Complex	communica9on • Direct	communica9on
A	negotiation	view	of	Western
The	Deal
The patterns of negotiation
Party BParty A
Source: Browaeys and Price 2008: 277-280
A	negotiation	view	of	Western
Trust-based		
Relationships
Gifts	and	favours
Bonding	via		
entertainment
Contract	based	
on...
Communication is a key
• Can	build	up	a	long-standing	rela9onship	
• Rela9onship	may	begin	before	doing	business	
• Furthe...
eBay failed to establish trust in
transaction process
• Establishment	of	trust		
• The	emergence	and	importance	of	
• The	Chinese	refund	system
Great trust has been placed on T...
• Concern about Internet insecurity
➢ Invasion of privacy
➢ Expose personal details online (e.g. name,
address, bank accou...
Establishment of trust
The current Chinese banking system is primarily designed to accommodate
businesses, especially Stat...
Establishment of trust
Compared with the US, ‘Chinese legal infrastructure is not sophisticated and
organised enough’ (Efe...
The emergence and importance of Alipay
consumers sellers
● As the third part to protect and guarantee the consumers’ benef...
Taobao's refund system
ConsumersSellers
Afford the refund cost to
maintain lasting business relationship
‘Loss of face’ in...
Different Payment System
• Payment prior to receiving goods
• No communication during
payment process
consumers sellers co...
Conclusion
Not	all	mul9na9onal	companies	failed	in	China	
• eBay	could	not	understand	the	characteris9cs	of	Chinese	
consu...
• Different	cultures	in	China	and	America	
• Goods	and	Service	Industry

-		Service	Adapta9on	(Rugman	and	Verbeke,	2008a

-...
Lesson learned
• Understanding	the	consumer	characteris9cs	is	necessary.	
• Culture	is	not	explicit	but	powerful.	
• No	cu...
References
• Ackerman, D. and Tellis, G. (2001). ‘Can culture affect prices? A cross-cultural study of
shopping and retail...
Questions & Answers
A cross-cultural analysis about the failure of eBay in Chinese market
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A cross-cultural analysis about the failure of eBay in Chinese market

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An analysis of cross-cultural issues that led eBay to failure in Chinese market.

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A cross-cultural analysis about the failure of eBay in Chinese market

  1. 1. A cross-cultural analysis about the Failure of eBay in China
  2. 2. NAWATAT SUWANSINPAN 150239291 MENGXIN LIU 160017582 PENG LIU 
 160011616 XINMIAO LIANG 
 160507290 Team Introduction
  3. 3. Agenda • Chinese market is not dangerous • eBay and Taobao • The failure of eBay in Chinese market • An analysis of the failure Chinese consumer characteris9cs Communica9on Trust-based rela9onships • Conclusion • Q&A
  4. 4. Chinese market is not dangerous • Not all multinational companies failed in China • In general, China is open towards Western multinationals • An increased popularity in Chinese e-commerce • Chinese market is not as functional as American’s • A key is to understand what Chinese customers are used to while purchasing products
  5. 5. • First launched to public in March 1998 • Online auction and shopping website • People buy and sale a variety of products worldwide • Global leader in online C2C services (Customer-to-Customer) • Enter Chinese market in 2002 • Took over EachNet (Chinese company)
  6. 6. • Local compe9tor • Online shopping website • Taobao was launched in April 2003 • Integrated Chinese cultures into business • 30 million ac9ve users on Taobao by the end of 2006 (PACIS Proceedings, 2008) Source: Ye , Hu, and Li 2008: PACIS Proceedings. Paper 102.
  7. 7. Time Frame 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Alibaba was established EachNet was founded eBay went in China and took over EachNet Introduction of PayPal in China eBay has halted in China Taobao was launched Aliwangwang was created Alipay was created Taobao owned roughly 84% of market share in China
  8. 8. Market Shares Source: Standard Graduate School of Business (2010); Taobao vs. Ebay China, p.17 MarketShare
  9. 9. “eBay used the same strategy successfully across the world but not in China. This is a lack of cultural understanding of eBay.’’ —Prof. Cheng-Hua Tzeng
 School of Management, Fudan University
  10. 10. eBay could not understand Chinese consumer characteristics.
  11. 11. Markets in China
  12. 12. Markets in China
  13. 13. Markets in the US
  14. 14. Markets in the US
  15. 15. Shopping Behaviour in Supermarkets Chinese Speaking customers English Speaking customers The table adapted from: Ackerman and Tellis 2001: 57–82
  16. 16. Chinese Speaking customers English Speaking customers The table adapted from: Ackerman and Tellis 2001: 57–82 Shopping Behaviour in Supermarkets Numbers of bunches touched per selection Male 4.6 bunches 2.1 bunches Female 7.4 bunches 1.4 bunches Time per selection Male 38.8 seconds 13.9 seconds Female 54.2 seconds 7.7 seconds Observations of other shopping activities No. of shoppers smelling fruit 13 person 0 person No. of shoppers digging for fruit 40 person 2 person No. of shoppers scratching and tapping skin of fruit 17 person 1 person OBSERVATIONS
  17. 17. Markets in China and the US • Lengthy-conversa9on • More-interac9on • Price can be nego9ated • More-selec9ve • Short-conversa9on • Less-interac9on • Non-Nego9able price • Less-selec9ve
  18. 18. Markets in China and the US • Lengthy-conversa9on • More-interac9on • Price can be nego9ated • More-selec9ve • Shopping is an entertainment • Finding the best value • Short-conversa9on • Less-interac9on • Non-Nego9able price • Less-selec9ve • Shopping is a task • Saving 9me
  19. 19. Dependent Chinese and Independent Americans • tend to rely upon others • retain a close rela9onship with people around them • feel liVle pressure to seek other forms of psychological comfort • nature of group culture • self-reliant • acquire material comforts or overcome the physical environment • intensify their acquisi9ve ac9vi9es and create more devices for their security and safety • more independent Source: Hsu’s observation in Sun et al. 2000:156-165. Chinese People Americans
  20. 20. eBay did not allow buyers to communicate with sellers easily.
  21. 21. eBay’s user interface Screenshot from: http://www.aboutdm.com
  22. 22. Taobao’s user interface Screenshot from: http://dodri0.tumblr.com/post/101239021220/how-to-use-aliwangwang-to-chat-with-taobao-sellers
  23. 23. Taobao’s user interface Screenshot from: http://dodri0.tumblr.com/post/101239021220/how-to-use-aliwangwang-to-chat-with-taobao-sellers
  24. 24. A comparison of two website features • Product photos • Product descrip9on • User reviews and Comments • Product photos • Product descrip9on • User reviews and comments • Instant communica9on by Ali-wang-wang
  25. 25. Pattern of communication • Complex communica9on • Direct communica9on
  26. 26. A negotiation view of Western The Deal The patterns of negotiation Party BParty A Source: Browaeys and Price 2008: 277-280
  27. 27. A negotiation view of Western Trust-based Relationships Gifts and favours Bonding via entertainment Contract based on a handshake The patterns of negotiation A negotiation view of Asian The Deal The Deal Party BParty A Party A Party B Source: Browaeys and Price 2008: 277-280
  28. 28. Communication is a key • Can build up a long-standing rela9onship • Rela9onship may begin before doing business • Further communica9on will base on the developed rela9onship • Gaining trust is necessary Chinese consumers are • Selec9ve • Finding the best value
  29. 29. eBay failed to establish trust in transaction process
  30. 30. • Establishment of trust • The emergence and importance of • The Chinese refund system Great trust has been placed on Taobao
  31. 31. • Concern about Internet insecurity ➢ Invasion of privacy ➢ Expose personal details online (e.g. name, address, bank account) Establishment of trust Chinese people lack trust in business transaction process In the USA: only 21% of Internet users believe that online purchasing data transactions are secure, these same concerns are major issues for Chinese consumers conducting online transactions, and are even amplified as a result of Chinese cultural characteristics. (Nua Internet survey, 2002: 58)
  32. 32. Establishment of trust The current Chinese banking system is primarily designed to accommodate businesses, especially State Owned Enterprises (SOE). Chinese banking system has not supported consumer lending practice, meaning Chinese Banks don’t lend money to individual consumers for purchase. Consequently, Chinese people form the concept of ‘buy when you have cash to pay’ Credit card payment involves more exposure of privacy Source: Efendioglu and Yip 2004: Interacting with computers 16(1), 59-60
  33. 33. Establishment of trust Compared with the US, ‘Chinese legal infrastructure is not sophisticated and organised enough’ (Efendioglu and Yip, 2004: 59) Illegal activities Especially: Fraud it is unclear: How to be convicted ?
  34. 34. The emergence and importance of Alipay consumers sellers ● As the third part to protect and guarantee the consumers’ benefits ● A platform to build trust (McKnight et al.) ● Consumers’ money deposited during transaction process ● Money will be paid when a transaction is done with satisfaction about goods and service Source: Lu and Zhou (2007) Dissatisfaction Refund
  35. 35. Taobao's refund system ConsumersSellers Afford the refund cost to maintain lasting business relationship ‘Loss of face’ in rejecting purchase, buy again • Communication is important for consumers and sellers to establish trust, which can reduce the possibility of refund
  36. 36. Different Payment System • Payment prior to receiving goods • No communication during payment process consumers sellers consumers sellers • Payment after receiving goods • More communication during payment process
  37. 37. Conclusion Not all mul9na9onal companies failed in China • eBay could not understand the characteris9cs of Chinese consumers. • eBay did not allow buyers and sellers to have an instant communica9on. • Payment method used by eBay could not make Chinese people trust.
  38. 38. • Different cultures in China and America • Goods and Service Industry
 - Service Adapta9on (Rugman and Verbeke, 2008a
 - Service Sa9sfac9on (Garbarino and Johnson, 1999) Conclusion
  39. 39. Lesson learned • Understanding the consumer characteris9cs is necessary. • Culture is not explicit but powerful. • No culture is sta9c, it always changes. • Rela9onship can be one of the keys to be successful. • Goods and service industries require different approaches.
  40. 40. References • Ackerman, D. and Tellis, G. (2001). ‘Can culture affect prices? A cross-cultural study of shopping and retail prices’, Journal of Retailing, 77(1), pp. 57–82. • Browaeys, M. and Price, R. (2008). Understanding cross-cultural management. 1st edn. Harlow, England: Financial Times/Prentice Hall. • Efendioglu, A.M. and Yip, V.F. (2004). ‘Chinese culture and e-commerce: an exploratory study’, Interacting with Computers, 16(1), pp. 45-62. • Lu, Y. and Zhou, T. (2007). ‘A Research of Consumers’ Initial Trust in Online Stores in China’, Journal of Research and Practice in Information Technology, 39(3), pp. 167-180. • Sun, T. Chen, Q. Fang, T. and Liang, S. (2000). ‘A tale of two cities - A buying behavior perspective’, Advances in Consumer Research, 27(1), pp. 156-165. • Ye, Q., Hu, Q. and Li, Y. (2008). ‘How organizational culture shapes competitive strategies: a comparative case study of two e-commerce firms in China’. PACIS 2008 Proceedings, Paper 102.
  41. 41. Questions & Answers

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