China's Would-Be Amazon Steps Up

China's Would-Be Amazon Steps Up

By LYNN COWAN

This week is an active one for the U.S. IPO market, with eight deals vying for investors' attention, but the clear leader of the pack is online bookseller E-Commerce China Dangdang Inc.

The Beijing-based company, which has been operating for more than a decade, is getting top billing as China's version of Amazon.com. It is listing its initial public offering of stock on the New York Stock Exchange under the symbol DANG, with hopes of raising $221 million.

.Dangdang claims to be the largest book retailer by revenue in that country, and is expanding into other general merchandise areas. Operating in a country with the largest number of Internet users in the world, yet a relatively low Internet penetration rate compared to Western standards, the company has churned out at 56% increase in total net revenue in the first nine months of the year, compared to the same period of 2009. That's the kind of top-line growth that American investors love to see from China, and analysts are predicting a good first-day pop for the stock.

But amid all the buzz over Dangdang, investors shouldn't lose sight of the fact that the company remains foremost a bookseller—comparable to Amazon.com only if you roll back the hands of time. Amazon makes more from electronics and general merchandise than books now, and while Dangdang is pushing toward sales of other merchandise, more than 80% of its net revenue is still derived from books and other media products.

Branching out beyond books to a level that equals Amazon's may be a challenge; just last year, Dangdang launched its dangdang.com marketplace program to allow third-party sales of merchandise alongside its own products. Its biggest rival in this space is Alibaba Group's Taobao.com, China's largest Internet retail platform. Taobao, a consumer-to-consumer portal, recently launched its business-to-consumer sales forum, Taobao Mall, as a separate site called Tmall.com.

Though Dangdang will be in the spotlight this week, there are four other Chinese companies hoping to come public in the U.S. as bankers push through the final stretch of the year, including Internet television company Youku.com Inc., listing on the NYSE as YOKU; mobile-phone app store Sky-mobi Ltd., headed for the Nasdaq under MOBI; film distributor Bona Film Group Ltd., also Nasdaq-bound under BONA; and auto dealer Lentuo International Inc., going to the NYSE under LAS. For a little bit of variety, a Taiwanese maker of light-emitting diodes, SemiLEDs Corp., is going to the Nasdaq under LEDS.

There are just two U.S. IPOs listing in the U.S. this week: gas partnership owner Targa Resources Corp. and First Republic Bank, a commercial bank and trust company based in San Francisco that caters to wealthy customers.

Write to Lynn Cowan at lynn.cowan@dowjones.com