Newegg denies it halted Chinese investment

Summary:The U.S. e-commerce company's China branch denies its parent company had pulled back investment in the Chinese market, even as its local market share dipped to 0.3 percent.

Newegg China has denied recent reports which indicate its U.S. headquarters has stopped investing in China, amid the e-commerce company's market share in China dropping to a record-low of 0.3 percent in first-quarter 2013.

A Beijing Business Today report published Thursday said Newegg China was experiencing a financial crisis as its U.S. parent company had pulled back its investment in the Chinese market, adding that Newegg China was putting up its warehouses and offices to raise over 50 million yuan (US$8.2 million) as "the final capital to end everything".

On the same day, Newegg China's official Weibo microblogging account described the report as unsubstantiated. The company said its U.S. headquarters never stopped financing the China outfit and was actually expanding.

Zhou Zhaowu, president of Newegg China, told it was pouring over 100 million yuan (US$16 million) into its new office building in Jiading, located 30km from Shanghai, and construction will begin in July.

According to an industry report issued by Sootoo Research Institution on July 4, Tmall and Jing Dong continued to dominate the Chinese B2C (business-to-consumer) e-commerce market, while Newegg's share in the first quarter plunged to a record low of 0.3 percent, down from 0.7 percent in 2012.

Due to their basic development models in China, comprising namely of improving users experience and establishing self-owned logistic networks regardless of cost, the failure of foreign e-commerce players such as Newegg is inevitable, according to Sootoo's analyst Shen Yuede.

China's National Copyright Administration last month said it would begin supervising e-commerce sites in a bid to fight online piracy and address complaints from content producers. 

Topics: E-Commerce, China


Liu Jiayi is a Hong Kong-based writer and editor. He produces video stories for Al Jazeera English and Seven News Australia, and also worked as the video editor for the Hong Kong-San Francisco Ocean Film Festival 2012. He is studying under a Master of Journalism Programme at the University of Hong Kong.

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