Online: Jingdong, Baidu, Dangdang 京东进军电子支付 百度营收放缓
A number of interesting tidbits are sifting through the online world today, including news from the e-commerce space that Jingdong Mall is entering the electronic payments space and that Dangdang (NYSE: DANG) has replaced its CFO. Meantime, online search leader Baidu (Nasdaq: BIDU) has reported its latest results that show its growth continues to slow, with the rapid rate of the slowdown slightly alarming.
Let’s start with the Jingdong news, as that’s probably the most intriguing and significant of these news bits. Media are reporting that China’s second largest e-commerce firm, which also goes by the name 360Buy, has acquired an electronic payments firm called Chinabank Payments (Beijing) Technology. (English article; Chinese article) I’ve never heard of this e-payments company before, and it’s probably just one of several dozen that have been officially licensed to offer such services over the last year. Of course what is more significant here is that Jingdong is getting into the e-payments business, in what looks like a direct challenge to Alibaba’s Alipay and eBay’s (Nasdaq: EBAY) PayPal, which is seeking a license to offer domestic e-payment services.
This latest move would mark just the latest chapter in an ongoing feud between Jingdong and Alibaba, which is China’s largest e-commerce company. Jingdong reportedly cut off Alipay from its payment options about a year ago, and Jingdong also reportedly blocked its pages from searches by Alibaba’s eTao e-commerce search engine around the same time. Jingdong’s entry into e-payments certainly looks like a logical move, as the service will immediately find a big audience in Jingdong’s big customer base. The news also means that cutthroat competition in the e-commerce space could quickly spread to e-payments, as others look to capitalize on the payments part of this fast-growing market.
Meantime in other e-commerce news, Dangdang has announced the naming of a new chief financial officer, Zou Jun, who comes to the company from online video sharing site Xunlei. (company announcement) I’m not familiar with the company’s previous CFO, but I always find it a bit troubling when a company in financial turmoil replaces its CFO. In this case Dangdang’s financial crisis is the result of the prolonged stiff competition in China’s e-commerce sector, and thus isn’t really a company-specific issue.
Still, the replacement of a CFO just as the company’s losses are ballooning is a troubling sign, as the new CFO will probably come under some pressure to show the company’s financial situation is improving. That could mean he might resort to some creative financial tricks, which may improve the appearance of Dangdang’s results over the short term but could undermine its finances over the longer term.
Lastly, let’s take a quick look at Baidu, not because its latest quarterly results are very exciting but rather because it’s probably China’s most watched Internet company and thus serves as an industry bellwether. Baidu’s latest results show its growth slowing all around. (results announcement) Third-quarter revenue growth slowed to 50 percent from 60 percent in the second quarter, and Baidu forecast the growth would slow further to about 40 percent in the fourth quarter. Profit growth also slowed to 60 percent from 70 percent.
Such big drops certainly aren’t encouraging, especially since some advertising-dependent companies previously indicated they would see a third-quarter rebound due to business related to the London Olympics. Otherwise this slowdown itself isn’t really surprising, though the rate of slowing growth could foreshadow difficult times ahead for this Internet superstar.
Bottom line: Jingdong’s entry to e-commerce will provide a major new rival to Alibaba, while Baidu’s rapid growth is showing signs of quickly fizzling.
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