Page 62 - How China Is Winning the Tech Race

Life in New York City for nearly a decade had shown her that shopping
can be fun, with relaxing Saturday afternoons spent browsing neat book-
stores in midtown and sleek fashion boutiques on Madison Avenue. Grasping
the opportunity to bring a small piece of the consumer culture she had expe-
rienced in the West to China, she and her husband, Li Guoqing, set out to rev-
olutionize the Chinese book distribution business. They vowed to make the
Internet a key way to sell books in China, just as Amazon.com had done in
the United States.
“I saw the sharp contrast in consumerism between the United States and
China. It is two different worlds,” says YuYu, age 42, who with her short-
cropped black hair and round-rimmed glasses looks like a serious-minded
librarian. “In the United States, it’s almost to the stage of over-retailing,” she
adds, ticking off major book marketers such as Barnes & Noble, Doubleday,
Waldenbooks, and Borders.
But China has no national distribution network and only limited use of
credit cards for online purchases. She succinctly sums up why Dangdang
stands out in the Chinese book maze. “We made shopping for a book really
easy for consumers. That’s what we got right,” she says. “We wanted people
to come to us when they couldn’t find things locally.” Chinese consumers did
exactly that, lured to Dangdang because it offered the widest selection of
books online in a market where availability was an issue. Tossing in 40
percent discounts off list prices didn’t hurt in a nation where cheap pirated
copies are rampant.

T rying harder

YuYu made her start-up tick by relying on strategic instincts, benchmarking,
merchandising flair, financial smarts, and an insider’s perspective on the local
market. In four short years compared with seven years for Amazon.com in the
United States, she took Dangdang.com to profitability—with a $40 million
assist from venture capital investors in the United States and China. Another
asset was YuYu’s ability to capitalize and learn from others’ mistakes. When
Joyo.com slipped after Amazon bought it, she moved right in and tripled
Dangdang’s sales in one year.
Granted, tiny Dangdang doesn’t come near the colossus Amazon.com and
probably never will. Nevertheless, in a vast country with few chain stores and

36 SILICON DRAGON