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It looks like a couple of factors may be leading e Bay to leave the Chinese market completely.

Shanghai Daily is reporting that e Bay has agreed to sell e Bay’s China division and its Pay Pal service to Tom.com, a company that already distributes e Bay’s Skype service to the Chinese market. First, e Bay, which had as much as 90% market share in China for C2C transactions, has lost significant market share to upstart (and free) rival Taobao.

e Bay is now left with just less than 30% market share for C2C transactions, even after moving to eliminate transaction fees in China a few months ago.

Second, China is preparing new regulations limiting foreign ownership of companies operating online payment systems.

Today, Taobao is the global leader of e-commerce with 80% of the Chinese market shares.

In fact, the ethnocentric management of e Bay has not allowed it to adapt its services and logistic to the new target culture: the Chinese one.

Taobao is an e-tailing platform created by Alibaba group in 2003, one year after the coming of e Bay on the Chinese market.

The managers of the American e-tailing platform considered that this Chinese version of e Bay was not a danger for the company. In March 2002, after doing a joint-venture with Each Net.com, e Bay had about 80% of the e-commerce market for Million and 33% of shares. At the end of 2006, e Bay cut its losses and shut its website because of Taobao’s success.

While e Bay didn’t want or think to adapt its strategy, Taobao is perfectly adapted to the local culture.

You could tell me “of course, it is a Chinese platform! Let’s have a look on the Taobao’s particularities that allow it to win the war against e Bay for the e-commerce in China.

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