Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Amazon.com, Inc. (AMZN), Wal-Mart Stores, Inc. (WMT): China Wants to Take E-tailing Seriously

Online retail may be getting a facelift in China if legislators have their way.

The government-run China Daily newspaper is reporting this week that the 12th National People’s Congress is considering a law that would tackle issues including unfair competitive practices, tax evasion, and the protection of intellectual property rights.

Stateside investors with retailers in their portfolio aren’t immune.

Amazon.com, Inc. (NASDAQ:AMZN)

Amazon.com, Inc. (NASDAQ:AMZN) is a big player in China. It acquired the country’s joyo.com, eventually folding it into Amazon.cn. Even Wal-Mart Stores, Inc. (NYSE:WMT) has some skin in this game after acquiring a majority stake in Chinese e-tailer Yihaodian last year.

Regulations concerning competitive practices, taxes, and intellectual property aren’t likely to faze Amazon.com, Inc. (NASDAQ:AMZN) or Wal-Mart Stores, Inc. (NYSE:WMT). They’re global juggernauts, and they’re used to being held to higher standards than hometown darlings. It’s never perfect. Wal-Mart Stores, Inc. (NYSE:WMT) has had more than a few hiccups overseas. Even the seemingly steady Amazon.com, Inc. (NASDAQ:AMZN) had to deal with a worker strike in Germany earlier this week.

However, the companies that will be watching legislative matters closely are the local companies that derive the lion’s share of their revenue in China.

Shares of Vipshop Holdings Ltd – ADR (NYSE:VIPS) tumbled 13% on Tuesday. It wasn’t necessarily the legislative concerns that knocked the online clothing discounter down. There was a Deutsche Bank downgrade on Monday, and Vipshop also responded to a bearish attack that had used data for traffic tracker Alexa.com to suggest bogus financials.

It was an isolated event. E Commerce China Dangdang Inc (ADR) (NYSE:DANG) — the publicly traded company that most stateside investors associate with e-tail in China — actually moved higher on Tuesday.

Clearly, investors don’t see a problem with legislators getting more serious about online retail. If anything, the bearish attack on Vipshop is proof that restoring investor credibility in the niche is important.

You don’t see anyone disputing Amazon.com, Inc. (NASDAQ:AMZN)’s sales metrics based on third-party traffic trackers. This could be a good thing for investors because there’s plenty of growth to be had in Chinese e-commerce.

E Commerce China Dangdang Inc (ADR) (NYSE:DANG) moved higher two weeks ago after better-than-expected quarterly results prompted two analysts to upgrade the shares. Earlier this month, Vipshop posted quarterly results that saw revenue more than triple.

The growth is there. Market credibility is the problem. Cleaning things up — the right way — will help.

The article China Wants to Take E-tailing Seriously originally appeared on Fool.com and is written by Rick Munarriz.

Longtime Fool contributor Rick Munarriz has no position in any stocks mentioned. The Motley Fool recommends and owns shares of Amazon.com.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Loading...