By now, most of you know what has happened to eBay in China: they tanked. They came into China woefully unprepared, spent a lot of money, and now they are essentially gone. But in a classic example of Western face saving (better known in the West as getting things in line for the annual report to shareholders) eBay is throwing good money after bad by overpaying for a 49% share (yeah, that will give them a lot of control) in a joint venture with a relatively unsuccessful Chinese online company, TOM Online.
And now, it seems we are supposed to attribute it all to politics.
But I do have to give eBay credit for getting the New York Times to flack for it by attributing it all to Chinese politics. In its article, For eBay It’s About Political Connections in China, the NYTimes describes eBay’s failures in China as “the latest sign that local knowledge and connections matter in the Chinese market,” as though eBay had no way to know about or prepare for either of these things before going into China.
Ebay failed in China because it failed in China. Does anyone really believe some guy on his computer in Shenyang did not go on eBay because his government would prefer he go on Sina.com? Does anyone really believe the myriad small foreign companies that are succeeding in China are doing so because of politics? And how is it that the article can talk rapturously about TOM Online’s great political connections but also admit it has been “a fairly small, struggling company until now?” If, as this article would like its readers to believe, political connections are the be all end all to China business success, why is TOM Online “struggling?” Also, why have so many other American companies wildly succeeded at doing business in China?
I am not impressed. Are you?
Update: I met with a number of China attorneys the other day and the subject of ebay in China came up and not a one of them disagreed with this post. For what that is worth….