Homegrown firms are reaping the biggest rewards in China consumer Internet boom

[mandy]

As China's Internet booms, homegrown businesses are often reaping the biggest rewards -- a departure from many other consumer industries in China where foreigners have dominated.

Peggy Yu and her husband, Li Guoqing, founded online bookseller Dangdang.com in 1999, when online commerce in China was more hope than reality. Today, China boasts 123 million Internet users -- second only to the U.S. -- and a growing share of them are using the Web to shop. Dangdang has expanded into a range of new products and claims to be China's biggest online retailer. Its success has enabled Ms. Yu and Mr. Li to fend off competition from a deep-pocketed foreign rival, German media giant Bertelsmann AG, and to rebuff a takeover offer from Amazon.com Inc., which later bought Dangdang's chief Chinese rival.

Historically, foreign companies have taken the lion's share of many of China's consumer-focused markets, like those for cola, cars, and cellular phones. Dangdang's story -- and others like it -- demonstrates how local competitors in Internet businesses are battling back or even beating foreign rivals such as Amazon, Yahoo Inc., Google Inc., and eBay Inc..

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