研讨RaceRacetothebottom

论文导读：RidingtheweEvenamidtheoften-awe-inspiringgrowthfiguresofmanyindustriesinChina,e-commercestandsoutasaremarkableopportunity.Themarketexpanded66%lastyearandisontracktogrow54%thisyear,accordingtoestimatesbyChineseconsultancyiResearch.Someofthefac1234
“One shareholder told us, ‘We he nothing but money. You go ahead and kill them all,’” Liu Qiangdong, the CEO of e-commerce site 360buy, wrote on his Sina Weibo account in August.
The bombastic statement was just one of many that the chiefs of China’s top e-commerce companies exchanged during an industry-wide price war this summer. Liu triggered the media showdown with his outsized claim that 360buy, also known as Jingdong Mall, would make no gross profit on sales of large home appliances in the next three years. Retailer Suning fired back by vowing t摘自：论文范文www.7ctime.com
o beat 360buy’s prices, while competitor Gome guaranteed “the cheapest prices in history” for home appliances. Alibaba, the leader in China’s e-commerce market, also jumped in, promising to subsidize online purchases.
By early September, regulators had confirmed that the price war was, at least in part, a farce (see box, pg 37). Sites had, in some instances, failed to stock the products or provide the discounts they advertised, or raised prices before cutting them. Even so, the price war had its intended effect: winning the attention of consumers and the media. White-collar workers chattered about the companies in Shanghai’s elevators and subways, and many Chinese made their first tentative clicks on the sites.
The price war provided a window into an industry where the stakes are high and the competition is cutthroat. Boston Consulting Group (BCG) estimates that, each year until 2015, 30 million new Chinese consumers will shop online – nearly the size of Canada’s total population. Yet winning a greater share of the market will be a long and painful process for companies and investors. E-commerce companies he seen profits slip and costs spiral as they slash prices and invest heily in a bid to increase their market share. Meanwhile, China’s broader economic slowdown is also taking a toll on their business.
“It becomes a war of the balance sheet; ‘I can afford to lose money for a longer period of time than you can,’” said Michael Clendenin, managing director of Shanghai-based consultancy RedTech Advisors. “Ultimately, if you’re a consumer, it’s great. If you’re the investor, it’s not so great.”
Riding the we
Even amid the often-awe-inspiring growth figures of many industries in China, e-commerce stands out as a remarkable opportunity. The market expanded 66% last year and is on track to grow 54% this year, according to estimates by Chinese consultancy iResearch. Some of the fac论文导读：themidsingledigits,accordingtoaHongKonganalystmeetingthisspring)tobetterappealtoIPOinvestors,multipleanalystssaid.AfteritsIPO,however,360buyseemslikelytodoubledownonprices,makingcompetitioninthee-commercemarketnextsummerevenfiercer.ButdespiteCEOLiuQi
tors driving this growth are clear: Chinese incomes are rising, and broadband networks are expanding across the country.怎样写论文www.7ctime.com
摘自：写毕业论文经典网站www.7ctime.com
However, financing the massive build-out will be a challenge. The company purportedly devoted about 70% of the capital from its first- and secondround investments to purchasing land and building logistics centers. While Jingdong’s cash position is unclear, since the company is private, some of the land plots it purchased are currently lying fallow, indicating it may be short of funds to develop them.
Jingdong announced in April 2011 that it had raised US$1.5 billion from investors including Russia’s Digital Sky Technologies, but it seems to he burned through much of this cash. Jingdong is now going through another funding round that is rumored to value it at a discount to its earlier investments. “Their cash position is not dire, but certainly they recognize that they need more cash,”said Clendenin of RedTech Advisors.
The company plans to further bolster its cash reserves by going public in the US in early 2013. While the offering may be underpriced because of cool market sentiment towards Chinese companies, it would still give 360buy an influx of cash it could use to outpace its competition.
Before the IPO, Jingdong may cool its price cutting tactics as it tries to raise its gross margin (currently in the midsingle digits, according to a Hong Kong analyst meeting this spring) to better appeal to IPO investors, multiple analysts said. After its IPO, however, 360buy seems likely to double down on prices, making competition in the e-commerce market next summer even fiercer.
But despite CEO Liu Qiangdong’s bold rhetoric that he will receive funding no matter what, there is the risk that, at some point, 360buy’s investors will draw the line. “Nobody is God; you can’t expect investors to follow you no matter what,”said Stephen Sher, chairman of online clothing retailer Moonbasa. “Private equity has its own profit model.”
Brick and mortar
Meanwhile, the e-commerce businesses of traditional appliance retailer Suning(and, to a lesser extent, its rival Gome) seem to be gaining ground.
Times are tight for Suning as well: Its profits contracted 29.5% in the first half of the year, due largely to the slowing economy and especially the real estate market, which drags on purchases of appliances. But as a listed company, Suning is able to raise cash more easily. The company just completed a priv论文导读：hprovinceoperates“likeanindividualkingdom,”withitsownsetofcompanies,regulationsandtaxes,Chensaid.Insufficientinfrastructureisalsoachallenge,hesaid.Whileshippingcostsa上一页1234下一页
ate offering of US$741.6 million in July and plans to raise up to US$1.26 billion through bond sales, after which it would he US$5.21 billion in cash, Suning Vice President Sun Weimin t源于：论文的格式要求www.7ctime.com
old China Economic Review.源于：论文结论范文www.7ctime.com
This is an ideal way for internet companies to make money, said Clendenin of RedTech Advisors, because it entails few costs. “There’s no sales pressure, there’s no princ源于：免费论文网www.7ctime.com
iple, there’s no inventory risk. The money you make, you know 90% gross margins, all of that just drops straight to the bottom line,” he said. “That is what is going to make these platforms bigger than they are.”
Alibaba is clearly the best positioned as an online marketplace. Because Taobao blocks searches via Baidu, China’s largest search engine, many Chinese consumers now go directly to Taobao when they want to buy something. “Taobao is becoming almost like a search engine or starting point for online shopping in China. That in itself is incredibly valuable, because … the most valuable online advertising is advertising to consumers who are about to buy something,” said Walters of BCG. “There are many ways to potentially monetize that and capitalize on that going forward, and I think that’s probably what Alibaba is thinking about.”
Smaller players could theoretically close this gap with Alibaba if they merge and absorb the traffic of their rivals. Consolidation would offer all companies other benefits, for example instantly expanding their logistics networks.
China’s e-commerce market is very geographically fragmented, said Marie Jiang, a retail analyst at Shanghai-based research firm Pacific Epoch. For example, Alibaba dominates in eastern China, near its Zhejiang-province headquarters, whereas 360buy is much more concentrated in northern China. Based on some studies, the consumer overlapof these two sites is only 0.1%, she said. “I would say it’s a win-win strategy if one company acquires another,” Jiang said.
But the factors that he thus far kept this market so geographically fragmented may continue to limit consolidation. One is local protectioni, said Charlie Chen, an analyst at BNP Paribas. Expanding from a regional to a national player is much more complicated than in the US because in China each province operates “like an individual kingdom,” with its own set of companies, regulations and taxes, Chen said.
Insufficient infrastructure is also a challenge, he said. While shipping costs a论文导读：niesaremakingmassiveinvestmentsindistributioncentersandsystemsinanefforttoimproveserviceandlowercosts,buttheprocessisexpensiveandwell-locatedplotsaregettinghardertosecure.源于：论文标准格式www.7ctime.com上一页1234
re low in China, so is the quality of service. E-commerce sites are typically forced to rely on an assortment of tiny courier companies to make their deliveries, resulting in bad service that can dissuade customers and lead to inventory build-up. E-commerce companies are making massive investments in distribution centers and systems in an effort to improve service and lower costs, but the process is expensive and well-located plots are getting harder to secure.源于：论文标准格式www.7ctime.com