Weibo: Jingdong, Alibaba Rush IPO, SNS; Parcel Services in Chaos
The microblog realm has been buzzing loudly this final week of 2013 with stories that are likely to be major themes in the new year, led by a probable IPO by Jingdong, China’s second largest e-commerce firm. Meantime, e-commerce leader Alibaba was showing no signs of slowing down the endless promotion of its recently launched mobile instant messaging (IM) service Laiwang, as it tries to catch up with Tencent’s (HKEx: 700) hugely popular WeChat rival service. Lastly, tweets coming from top e-commerce firms Dangdang (NYSE: DANG) and Suning (Shenzhen: 002024) hint that 2014 could see the start of consolidation in the booming but also fiercely competitive parcel delivery sector, perhaps including a few major acquisitions and closures and a long-awaited domestic IPO for China Postal Express, the parcel delivery unit of China’s Post Office. (previous post)
The unusually loud chatter in the microblogging realm last week will probably continue into the first couple of weeks of 2014, as company executives lay out their priorities for the year ahead before the long Lunar New Year break in late January. On the IPO front, 2 of the biggest offshore listings next year will come from China’s leading e-commerce firms, Alibaba and Jingdong. While Jingdong is the second largest player in the sector, its current market value of less than $10 billion makes it a distant second to Alibaba, which some estimate could fetch a market value of more than $100 billion when it finally makes its highly anticipated IPO next year.
That huge discrepancy in market value is a major factor driving Jingdong to make its IPO early next year, since a listing after Alibaba would almost certainly attract far less investor interest. Signals hinting at an upcoming IPO first emerged earlier this month when its talkative CEO Liu Qiangdong suddenly returned to the company after a yearlong absence to take a management training course in the New York.
Last week Jingdong Vice President Wang Xiaosong was busy confirming recent reports that the company has recently become profitable, and even posted the text of a speech by Liu talking about the important move to the black. (microblog post). But more intriguing to me were a series of posts from Dangdang CEO Li Guoqing, saying Jingdong must make an IPO in the first quarter of next year to boost its capital. (microblog post)
Li’s series of posts are intriguing because it’s unusual for someone in his position to comment so specifically and with such urgency about a rival. Such talk makes me wonder if perhaps discussions are happening behind the scenes between the pair of companies. If such talks were really taking place and resulted in a tie-up, 2014 might see the start of a much-needed consolidation in the e-commerce space that could create a very solid second-largest industry player and serious challenger to Alibaba.
From Jingdong, let’s move to Alibaba, whose founder Ma Yun was continuing his aggressive promotion for Laiwang at a recent internal karaoke event, presumably some kind of holiday celebration. Ma’s friend Shi Yuzhu, who also happens to be founder of online game operator Giant Interactive (Nasdaq: GA), jokes in a microblog how Ma strong-armed him during the event to sign up for a Laiwang account, and how Ma helped him register under the name “lover of beautiful women”. (microblog post) Alibaba’s PR head Gu Jianbing also makes reference to Shi’s new moniker (microblog post), hinting that we’re likely to see more aggressive promotion of the service next year as Alibaba plays catch-up to Tencent’s WeChat.
Lastly let’s look at the parcel delivery messages coming from Dangdang and Suning, which both hint at the current chaos in the space. The parcel delivery sector has boomed in the past 2 years, as thousands of companies sprung up to deliver the millions of goods ordered online by China’s tech-savvy shoppers. But that boom has created a healthy dose of chaos as well, since the sector lacks major government oversight and many smaller companies provide services that are far from reliable.
In Dangdang’s case, criticism of the sector comes in another posting from CEO Li Guoqing, who comments on a specific case of a poorly run delivery service. (microblog post) In a post on a similar subject, Suning Vice President Li Bin apologies to Suning customers whose orders were delayed due to system problems around the Christmas holidays. (microblog post) While Li Bin’s post is probably more related to company-specific issues, it does underscore that parcel delivery problems will be a major issue for the industry in 2014. That could lead to some interesting new moves in the year ahead as the sector embarks on some much-needed consolidation.
