1.

Ebbay first entered the chinese market in 2002 by acquiring a 33 % stake in its local counterpart, EachNet, followed by full acquisition a year later in 2003. Critically asses ebay's choice of market entry strategy for china, listing both advantages and disadvantages of its acquisition strategy Answer : EBAYS STRATEGY IN CHINA-ACQUISITION OR ALLIANCE Q1. Critically assess EBays choice of market entry strategy for China, listing both the advantages and disadvantages of its acquisition strategy. Ans 1. Background.The strategic alliance between EachNet and eBay was an important decision based on Chinas heady economic growth. Western interest in Chinas internet sector was apparent owing to Chinas manufacturing led boom and gradual integration into the global trading community. EachNet has recruited 3.5 million registered users and was an ideal partner to further consolidate its leading role in the country's burgeoning ecommerce industry. Although the development of the Internet in China had skyrocketed, business orientated portals had had a difficult time generating revenue. But eBay had made success with its auction model in the United States and had been expanding abroad. In January eBay reported a fourth-quarter net profit of US$25.9 million and expected revenue for the first half of 2002 to be between US$490 and US$510 million. Advantages to ebay-EachNet The deal with EachNet was an important step forward in eBay's strategy to build a truly global marketplace. International expansion would be an important driver of ebays growth. 250 million strong emerging middle class would offer great potential. E-commerce revenue in China was expected to grow nearly 12 fold to more than US$16 billion over the next three to four years. Statistics from the China National Network Information Centre showed that China's Internet users had topped 33.7 million by the end of last year, up 49.8 per cent over the same period last year. Advantages of the acquisition. Executed in a two stage process- minority stake followed by acquisition would be a good strategy while testing waters in a new market.

 Founders of Eachnet were Meg Whitmans alums at Harvard- good personal relationships EachNet had good business knowledge.

2. Asses the potential benefits and risks of eBay's joint venture with Tom Online
Answer :

Joint Venture Between TOM Online and eBay

Chinese multimedia company TOM Online and US e-commerce company eBay Inc. yesterday announced the signing of a joint venture agreement that will set the foundation for the next phase of growth of e-commerce and m-commerce in the rapidly growing China market. International law firm Freshfields Bruckhaus Deringer advised TOM Online on the joint venture agreement with eBay EachNet, eBay's China-based subsidiary. TOM Online will have a 51 per cent stake in the joint venture, and eBay will have the other 49 per cent. At closing, eBay International AG will provide and initial funding of US$40m in cash in the form of capital of the joint venture and TOM Online will enter into a shareholder's loan agreement with the joint venture, under which, TOM Online will provide a shareholder's loan in the amount of US$20m to the joint venture. It is intended that the joint venture will design, develop, launch and operate a new online platform, which will be branded TOM EACHNET, to support the internet-based marketplace. The joint venture brings together the strength of both companies TOM Online's local market knowledge and active wireless base of more than 75 million and eBay EachNet's global e-commerce knowledge and large and active trading community in China. It also builds on the existing relationship between TOM Online and eBay's online communications business, Skype. China's Internet population grew by 19 per cent last year to over 123m users and the country has more than 400m mobile users. Partner Connie Carnabuci led the Freshfields Bruckhaus Deringer team. Connie commented, "This is a good match of core competencies, which should allow the joint venture to exploit the emerging online marketplace in China." Connie was assisted by Jennifer Li and Derek Shi from the Hong Kong office. Freshfields Bruckhaus Deringer is a leading international law firm providing a comprehensive worldwide service to national and multinational corporations, financial institutions and governments.

Through a network of seven offices in Asia, our lawyers practise international law and, where permitted, local law. Currently in Asia, there are 25 partners and more than 180 lawyers, supported by 160 support staff. The firm has a strong practice in intellectual property and information technology (IP/IT) in China, providing an integrated service to clients on a broad range of contentious and noncontentious IP and IT issues, frequently on a multi-jurisdictional basis (be it pan Asian, or China/Europe). About TOM Online TOM Online provides value-added multimedia products and services. The company's primary business activities include wireless value-added services and online advertising. The company offers an array of services such as SMS, MMS, WAP, wireless IVR (interactive voice response) services, content channels, search and classified information, and free and fee-based advanced email and online games. TOM Online is a subsidiary of TOM Group Limited, one of the leading Chinese language media groups in the Greater China region. About eBay Founded in 1995, eBay, a US listed company, enables e-commerce on a local, national and international basis with an array of websites - including the eBay Marketplace, PayPal, Skype, Rent.com and Shopping.com - that bring together millions of buyers and sellers every day.