BizChina

This weekend, eBay’s CEO John Donahoe shared the stage with Alibaba’s maverick founder Jack Ma at his annual Alifest conference in Hangzhou, China. Gady Epstein, Forbes Beijing bureau chief, has an intriguing blog post about how Donahoe wished a happy birthday to Jack Ma who not only defeated eBay in China, but also “encroaches on eBay’s home turf.” Since Epstein referenced my recounting of the eBay-Alibaba battle, I thought it might serve readers well to provide an excerpt here from my book The Chinese Dream:

In 2004, eBay had just entered China and was planning to dominate the China market. Alibaba was a local Chinese company that helped small- and medium-sized enterprises conducting business online. Most people in the West had barely heard about it.

Alibaba Group billionaire Jack Ma’s annual AliFest conference in Hangzhou features an intriguing, one might even say unlikely, keynote speaker Friday morning: John Donahoe, the CEO of eBay.

Why unlikely? This would be the same eBay that got trounced in China by Alibaba’s online marketplace Taobao.com. In fact, Ma created Taobao to do battle with Meg Whitman and eBay, and he not only won, he utterly vanquished his foe.

Taobao now enjoys more than 80% market share in China. EachNet, a once leading (though not profitable) online marketplace in China that eBay purchased for $180 million, is now mere background radiation on the Chinese Internet, with low single-digit market share. Whitman surrendered in 2006, entering into a joint venture with the Chinese portal Tom Online to operate EachNet.

The victory wasn’t a foregone conclusion. The tale of how it was achieved is recounted in detail in an upcoming book by Helen Wang, The Chinese Dream: The Rise of the World’s Largest Middle Class. Wang (also a contributor to the Forbes China Tracker blog) writes about her encounter with the Alibaba camp in 2004:

When I asked a senior manager at Alibaba whether the company was worried that it would be bought by eBay, I was blown away by the answer: ―We will buy eBay!

That might have been a laughable notion at the time, when Alibaba.com was still just an up-and-coming e-commerce company serving small to medium-sized businesses. Little more than three years later, Alibaba.com went public in Hong Kong, raising $1.5 billion. It was the second-biggest Internet IPO after Google. Alibaba had become an empire, and, as Wang notes, Ma was hailed in The New York Times as “China’s new Internet king.”

Now Donahoe, who became Whitman’s right-hand man on global e-commerce as eBay was on its way to defeat in China, has accepted an invitation to speak at Ma’s annual Alifest conference. The two men don’t appear to have business to discuss – they already sealed a deal earlier this year allowing the use of eBay’s PayPal to settle transactions on Alibaba’s online wholesaling platform, AliExpress. That came a year after Ma visited eBay’s headquarters during a U.S. trip.

And there is no indication that eBay will ever try to dethrone Taobao in China. If anything, Taobao continues to encroach on eBay’s home turf, acquiring two U.S. companies in recent months — Vendio in June, Auctiva in August — that will help it do more business with eBay’s merchants in the U.S.

So what are we to make of Donahoe’s journey to Hangzhou? He may be stumping for PayPal, which is growing quickly in greater China. Beyond that, the visit may not amount to much of substance. But if I may take a bit of poetic and historical license here – in other words, if I may exaggerate wildly for my own amusement – this is almost like Napoleon’s top lieutenant returning to Waterloo to speak at the invitation of the British Empire: He came, he saw, he was conquered.

Earlier this year, Lenovo launched an Android-based smartphone and revealed a new tablet computer with a detachable screen. Last month, the Chinese computer vendor also set up a new firm to develop a controller-free game console called eBox, in an effort to challenge Nintendo's Wii, Microsoft's Xbox 360 and Sony's PlayStation 3 in the booming gaming market.

In an exclusive interview with China Daily, Yang said that Lenovo was unable to expand its core competitiveness in the first few years after it acquired IBM's PC unit in 2005. But he noted that the company is now ready to challenge the world's biggest PC firms such as Hewlett-Packard, Dell and Acer.

Australian golf great Greg Norman shocked people back home when word spread in May that his golf-course design business had closed its Sydney office and opened a new sales-and-marketing office in Beijing. "Everyone in the golf world knows that China is the place to be," says golf coach Hank Haney, who spent years tweaking Tiger Woods' swing. "Golf is growing and growing here, and there is no reason to think it will stop." Haney was in Beijing in June to announce plans for his first golf academy in China.

Like so much else in China, it all happened in the blink of an eye. Long seen as a bourgeois sport, golf was banned, in effect, after the Communist Party took power in 1949. Now China has 400 courses, virtually all of them built in the last decade and a half. Much of the credit for this golfing boom goes to a former Hong Kong paper-and-packaging tycoon named David Chu.

David Chu (Chu Shu-ho)

Chu is the founder and chairman of Mission Hills in Shenzhen, the world's largest golf club, according to Guinness World Records. It sprawls over 20 square kilometers of lakes and manicured lawn, and boasts not only 12 courses but also 51 tennis courts in a surreal stretch of nets that ranks as Asia's largest tennis center. It was a big bet when it opened in 1994, but it broke into the black 18 months later and has been immensely profitable for most of the past decade, according to officials at the privately held Mission Hills Group. Chu's total investment in Shenzhen has grown to $1.5 billion, but villas along the courses sell at prices that top $25 million, and a membership can cost $265,000.