Japan's Rakuten to end Chinese e-commerce services under JV with Baidu

Rakuten to close e-commerce site in China because of heavy competition and failure to meet expectations

Japanese Internet giant Rakuten announced on Friday it would end a major e-commerce business in China with local search company Baidu, citing its failure to meet expectations in the midst of intense market competition.

Rakuten plans on closing its "Lekutian" online shopping business for China by the end of May, the company said. Services for the Lekutian shopping mall site, at Rakuten.cn, will stop on April 27.

The Lekutian site had been set up as part of joint venture with Rakuten and Baidu to tap into China's burgeoning e-commerce market. But on Friday, Rakuten said the site "did not perform in line with our expectations," and noted that competition in Chinese e-commerce market had "intensified."

Baidu, however, appeared to be caught by surprise by the news. "So far we have just been informed from the Rakuten side," said Baidu spokeswoman Betty Tian on Friday late afternoon local time. "Both parties are hammering out the details on what to do following the decision."

Both Rakuten and Baidu made the decision together, according to Rakuten's statement. But Baidu denied that claim.

Rakuten owns 51 percent of the joint venture, while Baidu owns the remainder.

The ending of the e-commerce services represents a blow to both companies aspirations to break into China's online shopping market. Rakuten is a major e-commerce operator in Japan, while Baidu is the dominant search engine in China.

China's online shopping space, however, is dominated largely by local industry players, including Alibaba Group, the country's largest e-commerce company. Last year, total transaction value in the country's online business-to-consumer more than doubled from the year before, reaching 240 billion yuan (US$38 billion), according to Beijing-based research firm Analysys International.

Expectations for the Rakuten and Baidu joint venture had been high, after the cooperation was announced in January 2010. Both companies invested US$50 million to build the site. A year ago, Baidu also transferred e-commerce services from its own Youa platform to Rakuten's China site.

A Rakuten China spokesman said on Friday the company set up by the joint venture will remain in operation. Rakuten will also continue exploring the Chinese e-commerce market to plan for other business opportunities, he added.

Join the newsletter!

Or

Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.
Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Michael Kan

IDG News Service
Show Comments

Brand Post

Most Popular Reviews

Latest Articles

Resources

PCW Evaluation Team

Aysha Strobbe

Microsoft Office 365/HP Spectre x360

Microsoft Office continues to make a student’s life that little bit easier by offering reliable, easy to use, time-saving functionality, while continuing to develop new features that further enhance what is already a formidable collection of applications

Michael Hargreaves

Microsoft Office 365/Dell XPS 15 2-in-1

I’d recommend a Dell XPS 15 2-in-1 and the new Windows 10 to anyone who needs to get serious work done (before you kick back on your couch with your favourite Netflix show.)

Maryellen Rose George

Brother PT-P750W

It’s useful for office tasks as well as pragmatic labelling of equipment and storage – just don’t get too excited and label everything in sight!

Cathy Giles

Brother MFC-L8900CDW

The Brother MFC-L8900CDW is an absolute stand out. I struggle to fault it.

Luke Hill

MSI GT75 TITAN

I need power and lots of it. As a Front End Web developer anything less just won’t cut it which is why the MSI GT75 is an outstanding laptop for me. It’s a sleek and futuristic looking, high quality, beast that has a touch of sci-fi flare about it.

Emily Tyson

MSI GE63 Raider

If you’re looking to invest in your next work horse laptop for work or home use, you can’t go wrong with the MSI GE63.

Featured Content

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?