Tmall.com under taobao.com, the largest E-commerce portal in China, has provided discounts as low as 65 percent off for its electronics products. Suning, one of China's largest electronics retailers, put up billboard on its online store, promising a one hundred yuan gift-card to lure consumers.
At the same time, 360buy.com, China's biggest business-to-customer company, is offering half off on clothes and fashion accessories. For example, a pair of Nike shoes usually priced at 640 yuan now is only 320 yuan.
The fierce competition has also dragged in several other major retailers, including gome.com, coo8.com, and 51buy.com. Vice President Sun Weimin from Suning Group, Gome's major competitor, says they invested huge amounts of capital to enlarge their market share in online retailing.
"In order to compete with others, we've provided discounts on products with total values of up to two to three billion yuan."
Market insiders say the large scale discounts started with one or two retailers, but it spread quickly to the entire online market, which is always sensitive to price. Vice President Zhang Shouchuan from 360buy.com.says:
"Of course we would consider our wins and losses, but our fundamental line is that we can't be weaker than our competitors."
Vice President Yao Danqian from Dangdang.com echoes this sentiment and says he is determined to confront the price war no matter what.
"As long as the price war is on, we'll always fight back, and it is possible that we can come out of it ahead."
According to data from iResearch Group, sales volumes for the domestic business-to-customer market of home appliance reached 2.12 billion yuan in 2009, and it remained at a high growth rate over the past two years.
President of China's General Chamber of Commerce Zhang Zhigang says the price war will push up the sales volume.
"It is the power of the market which leads to fierce competition among E-commerce merchants. Through the intensive competition, consumers can greatly benefit from the price drop, but I do hope these merchants can compete in a lawful way, thus they can benefit from the competition, and transfer the benefit to the consumers."
Market insiders say that, on the surface, the competitors are grabbing larger market shares, but the fundamental cause behind the scene is that the traditional retailers have continuously flocked into the online retailing area. Insiders also point out that the price war usually doesn't last long; the final winner will always be those who can provide better services and better quality.
For CRI, I'm Liu Min.
