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B2C to A-plus for China's E-commerce

Chinese officials hope the regulations help resolve disputes in small transactions and protect sensitive data -- presumably the likes of credit card numbers.

Despite inevitable trouble enforcing such rules on giant, multi-party B2B2C operators, any step forward should be good for e-commerce as a whole. "The regulations are almost certainly to be on the side of the Chinese consumer, and this can only encourage more sales over the Internet," says Lamine Lahouasnia, a global retail analyst with Euromonitor International.

China Tech News adds that the regulations will guide the health and popularization of e-commerce, presumably over the long term, and help to build a related credit system plus an information database. Those trends should increase traffic for e-sellers that are either scalable or already of massive scale.

"The Chinese Internet retailing market is far from saturated, but the market is consolidating as stronger players dominate and weaker ones are acquired," the Euromonitor analyst says. "There is still a lot of room to grow, but only for retailers with a unique proposition and vertical integration."

Some classic cases:

The commerce ministry gave U.S.-based global retailer Wal-Mart Stores (WMT) permission in August to increase its stake to 51.3% from 17.7% in a company that will own the online retailing business of China's largest online supermarket Yihaodian, Xinhua said. Wal-Mart share prices began hitting all-time highs from last month.

At the same time, Silicon Valley's Yahoo! (YHOO) is selling back half of its 40% stake in Chinese e-commerce firm Alibaba. The move could raise investor confidence in Yahoo!, which is also strong in Asia as a search engine and news aggregator. Its share prices haven't recovered to post-global financial crisis levels.

In a purely local example, the online arm of China's biggest home appliance seller, Suning (trading at 002024.SZ) will buy Redbaby, an e-commerce baby-related merchandise seller with 7.5 million customers, the China Daily newspaper said last week. Suning, listed on the dodgy yet indicative mainland stock exchange, saw share prices go up 11.2% in the week from Sept. 24.

A not-so-classic case:

E-Commerce China Dangdang (DANG) hasn't seen a jump in share prices since early 2011. The Beijing-based firm that does B2C trade in books and music reported a second-quarter net loss of 122.2 million yuan, versus 28.4 million yuan in the same period of 2011.

Its quarterly report cites increased warehousing and shipping costs, higher marketing expenses and a growing percentage of lower-margin "general merchandise" for sale versus its traditional media products.
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