Jingdong Mall Tries Gaming 京东商城有意进军网游业
When future historians look at the early days of the China Internet, Jingdong Mall will probably be remembered as a sort of hyperactive organism that had too much money and tried to do too many things, wreaking havoc on the entire web community in the process. That’s my latest assessment of this hyperactive e-commerce giant, which also calls itself 360Buy, following the latest reports that Jingdong now plans to get into the online games business. (English article; Chinese article)
I don’t want to be too negative here, but I honestly don’t see any connection at all between Jingdong Mall’s core e-commerce business and online gaming. Whereas the former business is centered on retail and counts older consumers as its main customers, the latter is an entertainment product whose main customers tend to be young men in their teens and early 20s.
But frankly speaking, this kind of expansion plan is increasingly consistent with this schizophrenic company, which has also entered such wide ranging industries as online travel and real estate services. (previous post) All of these new initiatives must be costing a lot of money and seem to stand very little chance of success, as Jingdong Mall will have to compete with established players like Soufun (NYSE: SFUN) and E-House (NYSE: EJ) in real estate, and an even bigger group of players led by Ctrip (Nasdaq: CTRP) and eLong (Nasdaq: LONG) in online travel.
But money never seemed to be an obstacle for Jingdong, which last year raised a record amount of more than $1 billion in new funds at the height of a major funding frenzy for Chinese Internet firms. Apart from all these initiatives outside its core retailing business, Jindong will also be remembered for sparking a round of online price wars last month with electronics retailers Suning (Shenzhen: 002024) and Gome (HKEx: 493), even though some later questioned the company’s sincerity in boasting it would undercut the prices of all its rivals. (previous post)
Frankly speaking, I’m surprised that Jingdong keeps launching these new initiatives since the company is rumored to need new cash and is reportedly in the process of trying to raise more funds after abandoning plans for an IPO.
Meantime, Dangdang (NYSE: DANG), one of Jingdong’s top rivals and China’s only listed major e-commerce firm, has said it has no plans to enter the parcel delivery or luxury products business, in what look like comments indirectly criticizing Jingdong. (Chinese article) From an investor perspective, these kinds of comments from Dangdang CEO Li Guoqing should be a positive sign, since they show that the company intends to remain focused on its core e-commerce business and won’t follow many of its rivals in making costly and often strange moves into other business areas.
That’s important for a company like Dangdang, which is showing it intends to be conservative with its cash until the current state of overheated competition settles down in the Chinese e-commerce space. Meantime, look for the hyperactive Jingdong to keep finding new ways to spend its cash until it eventually runs out of money, perhaps ending as soon as next year with the biggest and most spectacular failure to date in China’s young Internet space.
Bottom line: Jingdong Mall is continuing its directionless expansion with a rumored move into online games, as it rapidly burns through its huge cash pile with no sign of profits in sight.
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