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Gritty Tweaks Prepare a China E-tailer for U.S. IPO

BEIJING (TheStreet) -- The first Chinese online shopping company to apply for a U.S. stock market listing has been tweaking its business model for a decade while getting around regulatory and legal barriers that might have stopped a less ambitious firm long ago.

More tweaking may be needed to keep Internet retailer, which Thursday unveiled plans to raise US$1.5 billion this year in an initial public offering, competitive against formidable rivals Alibaba, Amazon (AMZN), Suning and Wal-Mart (WMT) in China's growing Internet marketplace.

JD is China's biggest business-to-consumer shopping platform, offering everything from fresh apples to designer handbags, washing machines and zinc supplements.

Last September, the privately held company -- whose investors include the Russian investment firm Digital Sky Technologies and Saudi Arabian Prince Alwaleed bin Talal, according to a prospectus filed with the Securities and Exchange Commission -- reported its first profit since launching in 2004.

JD reported earnings of $9.8 million on $7.7 billion in online sales revenue for the first three quarters of 2013. The company also said its 35 million consumer accounts during that period generated about $14.3 billion in transactions.

Its chief competitor is Alibaba, China's largest e-commerce company and operator of several Web sites including the retailer Tmall. Tmall and its big sister Taobao, a consumer-to-consumer portal, reported $161 billion in gross merchandise sales for the year ending March 2013. Alibaba says it may seek an IPO in New York or Hong Kong later this year.

JD's other major rivals include the China unit of Amazon, Walmart's China online division Yihaodian, and Chinese appliance retailer Suning. These and many smaller players have benefited from an ongoing shift to online buying in China. The business consultancy McKinsey & Co. last year said online retailers in China sold goods worth $190 billion in 2012, and could be selling $650 billion worth by 2020.

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