STRAITS TIMES/ANN – JD.com will offer discounts across its online shopping platforms from today in a CNY10-billion (SGD2 billion) campaign to capture new users ahead of an anticipated Chinese economic reovery in 2023.
The campaign has spurred concerns that larger rival Alibaba Group Holding or upstart PDD Holdings may retaliate with cuts of their own, igniting a margin-eroding price war. JD announced the launch of the subsidy plan in a statement on its official WeChat account on Saturday.
JD shares tumbled after news of the impending rivalry surfaced in the domestic media last week.
Alibaba executives have since dismissed speculation that it would directly engage its long-time rival, warning that a return to the price wars of years past was in nobody’s best interest.
In 2020, Beijing launched a crackdown campaign to rein in what it called the “reckless expansion of capital”, affecting sectors ranging from e-commerce to online education to the sharing economy. The government has begun rolling back restrictions since late 2022, intent on reviving a COVID-19-struck economy. Moves by Beijing to wind back its bruising crackdown on the tech sector were well received by investors in the back half of 2022, but that optimism is now starting to ebb.
Instead, markets are fretting about costly price wars and fresh rounds of cash burn as firms that are struggling to expand internationally intensify rivalries at home.
“With overseas opportunities for Chinese Internet companies drying up, it will be harder for them to do business and make acquisitions overseas going forward,” said Robert Lea, an
“Hence, they will be more focused on the domestic market for growth, resulting in rising competition, including on pricing.”
