Dangdang.com slips good chance to join Amazon
Dangdang.com, China's largest online Chinese book retailer, who turned down Amazon's takeover bid hoping to get higher prices, is regretting that decision, after its rival, Joyo.com, announced its merger with Amazon, said the latest edition of International Herald Leader.
"Unless Dangdang is able to get huge funds soon, it is doomed to lose to the competition," said Fang Xingdong, an e-commerce analyst, predicting that the competition in the Chinese on-line book selling market will pose more challenges to Dangdang.
Earlier in April, Amazon offered 150 million US dollars to buy a 70 to 90 percent stake in Dangdang. But after four months of talks, the Chinese book seller officially announced they were turning down the offer. They claimed that the company needed an investor but not a buyout.
Only two weeks after the announcement and unbeknownst to Dangdang, Amazon bought Dangdang's long-time rival Joyo with 75 million US dollars.
"Actually, Dangdang insisted on not taking the offer with the thought that Amazon might raise the price, but this trick busted the chance," the newspaper quoted an insider as saying.
Actually, Joyo, the paper said, contacted Amazon early this year about acquisition. Lei Jun, Joyo's president.
But Dangdang was not optimistic about the union of Amazon and Joyo, and it said the companies would need years to adjust to each other's very different management and operation styles.
The company said it has stepped up plans to seek an initial public offering on the NASDAQ stock market in 2005, two years earlier than its original plan.
However, more experts are worrying about Dangdang's future.
"As B2C (business-to-customer) model needs big investment for warehousing, Joyo will seize the advantage against Dangdang with strong capital support from Amazon," said Fang Xingdong.
"Even Dangdang goes listed next year as it plans, it does not hold any big advantage compared with Joyo," said another analyst who declined to be named.
Dangdang's yearly online sales in 2003 reached 80 million yuan (9.6 million dollars), while Joyo's Jan. to Sept. sales last year, mostly online business, were 105 million (12.6 million).
E-commerce, including online book shopping, is quickly catching on in China. Market researcher IDC reported that Chinese consumers spent 4.8 billion US dollars in online shopping last year; the figure is expected to grow to 14.6 billion US dollars by 2005.
Besides Amazon, global giant Google.com, Yahoo!, E-Bay and others also have announced deals aimed at earning profits from the increasing number of Chinese Internet users, which now number at more than 87 million, according to official statistics.