Market Entry Challenges in Asia Many Companies

Market Entry Challenges in Asia

Many companies want to move into Asia, but there are market entry challenges that have to be faced there. Still, Asia represents a very important and profitable market for many companies, and it is not unusual for these companies to draw major profits from their overseas operations. EBay, however, has many problems in the Asian markets, and has struggled with these issues in the past (Chan, 2007). In order to understand why this is the case for the company, one must address the 4 Ps (product, place, promotion, and price). By looking at each one of those, a person can get a better idea of why eBay failed in some of the Asian markets and why it performed better in others. In the U.S., eBay is very popular. The same is true for the UK and a few other countries. That does not mean, though, that the interest in eBay can be extended to every other country in the world - and eBay discovered that when it targeted countries like China and Japan (Mangalindan, 2006).

As for the first P, product, this was not a serious problem or eBay. The company is an auction site, so it does not actually have a product of its own. The products that are sold through the site are those that are listed for sale by sellers who are not actually affiliated with the site. With that in mind, it is very hard to say that eBay had a problem in a particular country because of its product (Ihlwan & Hof, 2006; Kotler & Gertner, 2002). Someone who is interested in global business should always pay careful attention to product, but for this kind of auction site there is little control over the product itself. Sellers decide what kinds of products they want to sell on the site, so this is not something eBay can control. However, the company can decide what types of things it does not want to allow to be sold on the site, so there is some control exercised.

The second P. is place. Again, this is another non-issue for the most part. From the standpoint of a global business, place does not matter that much because the company is online (Chan, 2007). Anyone who uses eBay knows that the site is strictly for auction and strictly online. There is no physical location for the merchandise to be picked up unless the seller wants to designate something as "local pickup only." That severely limits the pool of people who can purchase that item, but it is also by far the best choice for items like cars and pianos and other heavy, large objects. Shipping them would not realistically be possible, and the shipping would be too much for a buyer to bear. The fact that the largest majority of eBay transactions are handled online, however, helps the company operate in nearly any country it desires (Chan, 2007; Mangalindan, 2006).

Another issue that really was not an issue at all was the third P: price. Generally, the price of an item is a significant issue when it comes to what is being sold and the country in which it is being sold (Chan, 2007). However, because of the nature of eBay's company and business, the price that is asked for any item is set by the seller of that item. EBay takes its cut from the seller, so the buyer does not have to worry about paying anything extra over and above the sales amount. Taxes and shipping may or may not be included, but there is no "buyer's premium" or other expense added on. When eBay started trying to move into Asian markets, one of the things it did not worry about was price (Ihlwan & Hof, 2006). That made sense for the company, and it still makes sense. Since eBay does not have any control over the prices that are set by sellers, there is no reason for the company to use price as either a concern or a negotiating point when it is attempting to move into any new market (Mangalindan, 2006). The idea that people can set their own prices and decide what their items are worth is actually one of the main selling points of eBay's model.

Promotion is the P. that matters most to eBay. The company was a household name in the U.S. And UK, but in Asian markets there was not as much interest in eBay (Ihlwan & Hof, 2006; Mangalindan, 2006). With that being the case, companies like eBay really need to promote themselves properly so they can gain an advantage in a new country or market. The way eBay promotes itself is vital to consider, because what works in one market will not work in another market. Culture affects how a company does in an area in which it is not familiar. When eBay started trying to move into the Asian market, the culture was not as deeply considered as it should have been (Mangalindan, 2006). Some of the choices that were made with promotional efforts were not right for the market, and that showed eBay's lack of preparation for a culture that was far different from what it was used to (Mangalindan, 2006). Additionally, the Asian market does not mean that all Asian countries are the same. Each country requires marketing efforts that are unique to that country.