China Net Investor: Is eBay Dead in China?

From The Motley Fool: Is eBay Dead in China?

"Earlier this month, when Yahoo! announced that it was making a $1 billion investment to obtain a 40% stake in Chinese auctioneer Alibaba.com, even some of the most ardent eBay bulls probably got nervous (China Net Investor: Alibaba operates the consumer-to-consumer auction site TaoBao.com). It wasn't so long ago that Yahoo! had hooked up with Softbank to squash eBay in Japan."

"It's not going to play out quite that way this time."

"As a free site, TaoBao suffers from many of the same shortcomings that Yahoo! Auctions does domestically. Because it costs nothing to list an item, it's a haven for spam and unrealistic starting bid prices, just as eBay's own American site becomes a clutter of noise when it rolls out the occasional free-listing day. That just proves that the quality of traffic is just as important as the quantity."
"Earlier this year, TaoBao's grasp on the market was at 41% to eBay's 53%. They are both strong. History dictates that just one consumer auction site will reign supreme in any given country, but history can be a schmuck sometimes. China's Internet boom is in its infancy, with 1.2 billion of the country's 1.3 billion residents still not connected. Why can't there be two dominant players in a country that is many times larger than most nations?"
"One of the grandest misconceptions out there is that eBay failed in Japan. A more accurate description would be that eBay never had a chance to get started. Yahoo! had teamed up with Softbank in 1999 to launch its auction site well before eBay had even stepped foot on the rich country's soil. When eBay gingerly tried to enter the market, it got nothing but jet lag. It was toast.
That's not the case in China. TaoBao wasn't even around when eBay had acquired its first stake in EachNet three years ago and swallowed it whole in 2003. This isn't eBay's battle to win. It's eBay's battle to lose."
"If TaoBao succeeds, it won't be because it toppled eBay. It will be because it found a way to coexist. The pressure now rests on TaoBao and the strategy it takes in the future. The company has mentioned that it may start charging for auctions as early as next year, but I'm not entirely convinced that it will happen."
"China's potential is huge. It's why eBay can't afford to lose."

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