英闻天下——305 Online Retailer 360Buy Finishes 4th Round of Financing

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　　"What I can confirm with you is we indeed have this round of financing, and we have completed it. The names of these two companies can be confirmed, but it's not very convenient to talk about other specific details."

 

　　The company says the funds will be used for company operations, developing new businesses and building a logistics system. Liu Qiangdong, CEO of 360buy.com, said in a previous interview that the company had been investing a large amount of money in building its logistics system.

 

　　"We've been putting lots of money into logistics, and each year the number of our logistics employees has been increasing by 10,000. For example, in 2013, we are planning to hire 18,000 new employees working on logistics, while the number will reach 30,000 in 2014."

 

　　Liu Qiangdong says 360buy.com's business growth does not rely on advertising², but on providing competitive user experiences.

 

　　"When getting successful financing, many of our peers in the industry spend 70 percent of the capital on advertising, and this advertising would bring more business. However, when they ran out of capital, they saw their business soon drop off. So we do it differently. In the first four years of operations, we even did not set up a marketing³ department, and we didn't spend on advertising, but our business still kept growing."

 

　　Some industry insiders say 2013 will a crucial year for the company when it comes to an initial public offering, because only through an IPO can 360buy.com compete with rivals such as Suning.com and Gome online.

 

　　But Liu Qiangdong has stressed that the company won't consider an IPO before 2015.

 

　　"I think IPOs are a way for companies that have grown to a certain scale. We at 360buy.com focus on retailing⁴, so I believe we'll definitely turning to an IPO when we grow to a certain large scale."

 

　　Currently in China, most listed online retailers⁵ raise capital by issuing bonds, while those companies that don't hold IPOs rely on venture capital. With the money they raise, these online retailers turn to price wars. Although they see grace number of sale volume through low prices, they hardly make a profit.

 

　　Wan⁶ Donghui, Deputy Secretary of the China Electronic Commerce Association, says online retailers should be aware that price wars are not a way out.

 

　　"Price wars, especially cut-throat price wars, means these online retailers will fail to make a reasonable profit. That's why most of them are under stress brought on by poor cash flows."

 

　　Wang Donghui says cut-throat price competition will bring deadly results to the healthy development of the entire industry. Meanwhile, price wars will negatively influence product quality and end up hurting consumers in the end.

 

　　For CRI, I am Zhang Wan.

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