American cars and online exports colored in the week that was. Let's take a closer look.
A billion consumers longing for electronic payments can't be ignored
It's not exactly Nixon going to China, but it was just a matter of time before eBay's
After its acquisition of EachNet, which concentrates on the Chinese market, eBay, a Motley Fool Stock Advisor recommendation, became a force in China's online auctions overnight. Exporting PayPal was just the next logical step to facilitate the auction payment process.
But there's more. Disposable income isn't exactly disposable in China. With its young citizens paying just pennies an hour to play online games at Internet cafes, the amounts involved may not seem like much. But on the bright side, there are lots of those transactions going on. Companies like Shanda Interactive
PayPal may not be the perfect micropayment solution, but it's been doing just fine as the payment of choice for the smallest of eBay auctions. PayPal already has 71.6 million accounts worldwide. It's a proven entity that now seems likely to enter an unproven yet potentially riveting new region.
It won't be easy, though. Even eBay's EachNet has some worthy competition in China that serves as a stark contrast to its runaway leadership stateside. Then again, just because something is difficult, that doesn't mean it isn't worth the struggle.
If you're a Taurus, there's a Mustang in your future
Imitation isn't just the sincerest form of flattery. In the business world, it may very well be the ammo that feeds a price war. Ford
Ford saw that it's hard to argue with success. Car buyers took to GM's latest marketing gimmick in large enough numbers to give that automaker a 41% surge in sales for the month of June. That was its best showing in nearly two decades. Ford had to follow suit. More importantly, GM's success would be likely to come at the expense of Ford if the latter didn't come through with the drastic price cuts packaged in the clever "employee discounts for everyone" wrapper.
The real industrial worry here is how consumers will feel when the 2006 models start rolling off the line and the carmakers want to return to their less giving ways. With high gas prices and drivers watching their miles, GM found an ingenious way to get them to trade in their wheels. But if the promotion goes away next month. will the drivers move on as well? Cars come with a reverse gear, but it's a lot harder for the automakers to back out of something like this.
So, sure, PayPal is going to China, and car buyers are going to Detroit. Let's see which one -- if any -- comes back empty-handed.
The headlines behind this week's stories:
Until next week, I remain,
Longtime Fool contributor Rick Munarriz has no interest in buying a new car this year, though he wonders whether GM employees feel a little ticked off about temporarily losing the exclusivity on auto discounts. He does not own shares in any of the companies in this story. The Foo l has a disclosure policy. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.
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