Tuesday, December 19, 2006

How do you say "It" in Chinese?

A few notes on Ebay's announcement that it was shutting down its proprietary service in China to focus on a TOM Online-Ebay joint venture that is not yet operational (expected launch: sometime in 2007):

1. When was the last time a major American company announced it was "reducing" its exposure to China? China is usually protrayed as the next 'big market.' The announcement also indicates the write-off of $250M by Ebay in China since 2003 ($150M to buy EachNet in 2003, another $100M invested since, according to the Wall St. Journal.)

2. The timing seems strange. You would expect a major company announcing bad news (shutting down the majority of its Chinese operations, albeit temporarily) to be leaked late in the day, on say a Friday afternoon, not on the Monday directly before Christmas; the annoucement is just in time to be featured prominently on next week's 'year-end' wrap-up business shows. Ebay always struck me as a PR-savvy company.

3. Ebay's stock is down 25% for the year, even as the market has risen generally.

4. Although unrelated, the Commerce Department announced a record trade deficit yesterday, of $225.6B for the third quarter (July to September). See point #1.

Late Update: BusinessWeek dug out a Meg Whitman quote from February 10, 2005:

We are on a tear to be the undisputed winner in China.


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