Page 69 - How China Is Winning the Tech Race

Her knack for taking on hard-core tasks stems from her parents, who were
engineers at a power plant in China. They had encouraged their intellectually
inclined daughter to pursue a job in China in the booming area of marine port
construction. “A lot of the things I was doing then are on a grander scale than
what I do now,” she reflects as she recalls countless business trips to visit
power plants, distribution centers, and law firms with top corporate officials.

Mistake money
Although it was unprofitable in 2006 because of investments in business
development, the firm turned its first profit in the fourth quarter of 2003, only
four years after its start. It took Amazon seven years to pass the same profit
milestone in 1995, and Joyo remains unprofitable. Dangdang was refueled
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with $11 million in venture money in 2004 and took in another $27 million
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in July 2006 as “mistake money” in case of a financial emergency, says YuYu.
The next step in Dangdang’s short history could be an initial public offering,
possibly timed for the 2008 Beijing summer Olympics.
Just like the Chinese search engine Baidu, which copied Google, and the
e-commerce leader Taobao, which copied eBay, Dangdang’s story of tri-
umphing over a strong American-owned brand by imitating it is by now a
familiar theme. In all three cases, astute local managers with Western know-
how and experience gathered from American firms’ mistakes were essential.
Sure, Dangdang chose a copycat route to victory. But look to YuYu and
her husband to gain more confidence and put more originality into their
strategic moves from now on. Bezos will have to move swiftly and boldly and
use his inimitable imagination and American firepower to keep his Chinese
online bookseller Joyo at the forefront.
In the next chapter, we see what happens when a local Chinese com-
petitor has an undeniable lead in a wide-open new market, in this case
the booming Chinese automotive market. The company I profile next,
Chinacars.com, is a classic story of copycat success. It is also a case study of
one of China’s leading up-and-comers on the emerging entrepreneurial scene.

Dangdang.com—The Amazon-Plus of China 43