eBay sees Taiwan, China in its future

SINGAPORE--While the world has hit the brakes on expansion, eBay has set its eyes on Asia.

The San Jose, Calif.-based online auction company, which last week launched eBay Singapore, also plans to extend its reach into Taiwan and/or China, according to a company executive.

However, Matthew Bannick, eBay senior vice president, declined to say when or how these plans will be carried out.

"China and Taiwan are rapidly growing markets with huge potential, and we are an established name with the right kind of formula for success," he said.

eBay, which also has a presence in Australia, Japan, Korea and New Zealand, said the Singapore launch was a move to quickly enter markets where English is a common language and where a minimal technology investment is needed.

"Singapore is a relatively small but highly developed market with an Internet-savvy population and an adequate level of e-commerce," Bannick said. "eBay's global community already includes thousands of users in Singapore."

Besides, Bannick said, the cost of setting up the site was modest "because it's hosted in the U.S. and we use the same engine used for other English language eBay sites."

And even though other online companies have found the going tough, even during the Internet boom, Bannick stood firm on the company's decision to expand outside the United States.

He declined to give revenue figures from Asia but noted that eBay expects $3 billion in revenue by 2005, and he said a third of that will come from Asia.

However, analysts do not share the same optimism as eBay.

"At present, it's difficult to do anything in Asia, let alone survive," said Matthew McGarvey, IDC Asia Pacific Internet Research senior analyst.

Coupled with the current economic situation, "it doesn't look good for eBay to expand into Asia," said McGarvey, who also noted that eBay should concentrate its efforts on geographical areas where it has been generating revenue.

About 85 percent of eBay's revenue for the last three quarters was generated within the United States, while the rest came from Europe, Asia and Latin America--lumped collectively as the rest of the world.

In its third fiscal quarter, eBay generated $194.4 million in sales worldwide--from which only 16 percent came from outside the United States.

eBay generated $180.9 million worldwide in the second quarter, and $154.1 million in the first quarter. The contributions from the international markets were 14 percent and 12 percent respectively.

IDC's McGarvey said online auctions have not really taken off in Asia. "This was because of lack of demand for such a service, and people who were using the auction (in Asia) were mostly expatriates," he noted.

"Nevertheless, eBay can play it safe by setting up its presence through partnership with local portals," McGarvey said. "This will help eBay market their product through a partner who knows and understands the local market better."

CNET Singapore's Nawaz Marican reported from Singapore.