Asian Brand Drama: Who Needs Desperate Housewives? Who Will Win the High-Stakes Branding Battle Between eBay & Yahoo! in China? And will Google be the Spoiler?

CEO of a well-known international brand consultancy and the author of the forthcoming branding book on brand metrics analyzes the developing e-commerce market in China.

(PRWEB) September 7, 2005 -- According to Nick Wreden, CEO of a well-known international brand consultancy and the author of a new branding book, the upcoming fight to win the hearts, minds and wallets of an estimated 200 million Chinese Internet users by 2007 will shape the worldwide fortune and brands of eBay, Yahoo! and Google.

Recent acquisitions by major online players have set the stage for a battle royale in the Chinese e-commerce market, which is growing an estimated 80 percent annually," says Wreden, CEO of FusionBrand and author of ProfitBrand: How to Increase the Profitability, Accountability and Sustainability of Brands, published by Kogan Page. Who needs Desperate Housewives with unfolding drama like this?"

In 1999, former schoolteacher Jack Ma launched Alibaba.com from an apartment in Hangzhou, China. Alibaba.com has since grown into three online marketplaces serving the B2B (alibaba.com), B2C (china.alibaba.com) and C2C (taobao.com) marketplaces. Essentially, Alibaba.com serves as an e-commerce aggregator, bringing together buyers and sellers. Forbes magazine has named the firm one of the Best of the Web" for five years running.

Alibaba.com succeeded because it filled a void. There was a dearth of printed catalogues and other tools to help buyers and sellers find one another. It sits in the middle of the worlds manufacturing belt, with hundreds of thousands of factories and suppliers nearby. And the home-grown company understands Chinese culture and business practices well.

However, its business model could have never passed muster with US venture capitalists. Alibaba.com allows buyers and sellers to contact each other directly (a big eBay no-no), and the sites are largely free of charge. Revenue primarily comes from charging for premium content/positioning and from a secured payment service like PayPal.

Alibaba lorded over the Chinese market until 2003, when San Jose, Calif.-based eBay purchased EachNet, another Chinese e-commerce site, for $180 million. The stage was then set for a battle of the titans. eBay is one of the worlds premier brands, with 2004 revenues of $3.27 billion. CEO Meg Whitman told analysts that China was a must win" and likely to be the defining measure of business success." It has promised to spend $100 million this year in China promoting its site, an overwhelming number considering that Alibabas gross revenues totaled only $68 million in 2004.

Who will come out on top?

Wreden points out eBays strengths and weaknesses in the coming battle. eBay is a classic customer-economy brand, having grown with minimal advertising and lots of word of mouth from passionate advocates," he says. It has also attracted a lot of negative press by raising fees, placing the burden of fraud detection on its buyers and sellers, and abysmal customer support that amounted to little more than automated emails."

EBay has initially come on strong in China, capturing an estimated 61 million Chinese users and about 55%-65% of the market. But the ultimate outcome is still in doubt, despite Whitmans hope that China becomes eBays biggest market in 5-10 years. Internationally, eBay failed so miserably in Japan it was forced to exit the market in 2002. (Its track record is much better in other international markets.) Another weakness in China is the need to adhere to eBays global platform, which hinders customization. Finally, it lacks a Chinese online payment platform like PayPal.

But this is no longer a local David vs. international Goliath story. Now there are two compelling brand stories involving eBay, Yahoo! and Google," says Wreden.

In mid-August, Yahoo! paid $1 billion in cash for a 40% stake in Alibaba.com, raising the spectre of 1999 dotcom madness. And the stage is set for a Yahoo! vs. eBay story while Google is stealthily moving into the markets of both. To make the story even more interesting, the new Yahoo!-Alibaba combination includes 3721.com, a Chinese-language search engine that Yahoo! acquired last year for $120 million. 3721.com competes with Baidu.com (which went up 350% on its first day of trading on US markets), partly owned by Google.

Experts are split on who the ultimate online winner will be in China. Standard & Poors downgraded eBay because of the threat, while the Economist magazine criticized Yahoo!s long-term strategy. Yahoo! China's president even quit because he didn't think the Alibaba transaction would work.

Wreden is betting on Yahoo!.

Initially, both will do well in a market expected to grow 80% annually for the next three years," says Wreden. However, as much as I admire Meg Whitman and her savvy executive team, ultimately Yahoo! will win out, despite the fact it way overpaid for Alibaba.com."

Pointing out that Yahoo! started with human editors indexing the Internet, Wreden believes Yahoo!s corporate DNA is based on personal skills and relationships, which will resonate in China much more than eBays blind faith in computer technology and an efficient marketplace. Yahoo!s combined capabilities will make it easier to find and buy products, a vital skill as China moves from communist to consumerist.

PR in Asia is generally abysmal, but Jack Ma understands how to use the press better than any other Asian executive," says Wreden. He cites this soundbite at the press conference announcing the link with Yahoo!: We're going after Baidu.com for the No. 1 spot in China. Google is history as far as I'm concerned."

Stay tuned for the outcome of this story. While it may not have the sex appeal of Desperate Housewives, it certainly has the capability to affect the future of online branding and e-commerce in China.

For more information, contact: Nick Wreden; FusionBrand; 208 Block D, Phileo Damansara One; Jalan Damansara; 46350 Petaling Jaya; MALAYSIA. +6 (03) 7954-2075. nick@fusionbrand.com. www.fusionbrand.com

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