E-Bay targets China for future growth
(Shenzhen Daily/Agencies)
Updated: 2005-02-16 13:52

The additional US$100 million investment that eBay Inc. was putting into its Chinese mainland operations should be a sign “of an unmistakable commitment” by eBay to win that market, the U.S. online auction giant’s president and chief executive Meg Whitman said.

The online population on the mainland is expected to exceed the U.S. online population by 2009. In five to 10 years, a company’s share of electronic commerce on the mainland would define that company’s success on the Internet, Whitman said.

“We are doubling down in China because the potential for Internet commerce in that country is simply extraordinary,” she said.

EBay announced last month that it would increase its investment on the mainland and its online payment system PayPal this year to US$300 million from US$200 million. The US$100 million increase worried some market watchers, who want to know what kind of return the company expects to get on the investment.

In other remarks, Whitman said Asia was currently the fastest-growing region for eBay and the U.K. was the company’s “next Germany.” The United States and Germany are eBay’s biggest and most mature markets.

Germany and the U.K. led eBay’s growth in Europe, and France and Italy were poised to be the next “stars,” said Philipp Justus, senior vice president of eBay Europe. The market opportunity in Germany was US$600 billion and eBay had US$7.6 billion, or a 1.3 percent share, of the market, Justus said. EBay planned to expand its business in Germany through several manners, including growing its user base and increasing the number of eBay stores, he said.

EBay could have capital expenses this year that are less than the company originally projected, Chief Financial Officer Rajiv Dutta said. The company now estimated those expenses to be between US$340 million and US$400 million, he said.

Product category growth through steps such as extending existing categories and developing new ones, said Bill Cobb, president of eBay North America. He cited changes made to the capital equipment segment within the business and industrial category as an example of working with existing categories. Capital equipment had opportunities in financing, warranties, logistics and maintenance, Cobb said.

The U.K. was “on track to become the next Germany,” Justus said. The business has been helped by more awareness of eBay in the last year or so, including media coverage, he said. The market opportunity in the U.K. was US$550 billion and eBay had US$3.7 billion, or a 0.7 percent share, of it, Justus said.

In Asia, eBay was investing heavily for future growth there, said Jay Lee, vice president of the company’s Asian operations. South Korea, Taiwan, Hong Kong, Singapore, New Zealand and Australia represented immediate opportunities for the company, while the Chinese mainland and India were longer-term opportunities but big ones, Lee said.

The mainland was appealing for several reasons, including that its middle class was expected to grow to 170 million by 2010 from 70 million currently, Lee said. There are 94 million online users on the mainland and eventually that number should be higher than it was in the United States, he said.

EBay would spend money on the mainland in a few key areas, including online and offline marketing, products, customer support, Lee said.

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