Stephen Ngai

TOM Online Must Focus on Products: Connections Don't Ensure Success

Practically, you can't do business well in China if you don't have CONNECTION. In business school, 4 Ps can only be applied well in North America. For China, you need 4 Ps + Connection.

How can you sell MOT phone, EL lipstick or COH bag if you don't have the followings:
1. Good location
2. All licenses of all levels of governments
3. All permits of all regulators
4. Permissions / Permits of New Products and New Businesses
5. Others

Connection will help to get all of the above.

Setting up a business in China especially an internet related company is very complicated. Without Connection, you can do nothing although you have the BEST 4 Ps. Without Connection, you can't sell new products and you can't get into those new profitable JVs.

As a former Ebay executive mentioned on your Article, " They (Ebay) needed to listen to the Eachnet Team which were closer to the consumers." This is the reason why Ebay have to marry Tom in China.

You may not know Li Ka Shing (Li) well. His son's drama of PCCW / CN had no effect on his relationship with China. Please don't under-estimate the Gold Finger of Li due to his vision, his ways of handling businesses and his way of managing good government connections.

Please don't under-estimate Wang Lei Lei, time will tell that he is WAYMORE CAPABLE to turn around the business of this Ebay Eachnet/Tom JV.

TOM is NOT in a sector this is at the mercy of CHL. TOM is the TIER 1 in wireless internet as comparing to SINA & SOHU based on the revenues of this sector. You are discriminating TOM.

Time will prove you (SELL) are right or wrong.

Disclosure: I am holding shares of TOMO and SNDA.