Jack Ma: In a Price War, Consumers Are the Ultimate Losers

Jack Ma, CEO of Alibaba, certainly knows a lot about e-commerce in China. In an interesting interview with TechWeb, Ma weighed in on the escalating price war in China between e-commerce giants 360Buy, Suning, and Gome, among others. Conventional wisdom is that a price war is always good for consumers, but Ma sees things differently:

Actually, a nasty price war hurts consumers’ interests the most. If the firms involved aren’t making profits, or are even operating at a loss […] they can’t possibly provide after-sales service, let alone innovate new things [that would ultimately be good] for consumers.

And a price war isn’t just bad for consumers. Ma clearly thinks that it’s not going the companies engaging in it much favors, either. He said that the supposed branding value of this kind of price war is overstated, and although he was pretty polite, it’s clear he’s not a big fan of the way that 360Buy CEO Liu Qiangdong launched this war on a whim:

When I learned from 360Buy CEO Mr Liu’s weibo that this large scale price war was a ‘snap decision,’ I was very surprised. A large scale enterprise with tens of thousands of employees and billions of dollars in business launches a big price war, and it’s because a leader made a snap decision to do it! I admire Liu’s courage and his warrior spirit, but I don’t know how he’s going to be able to deploy his troops and allocate his resources to fight this price war for the next three years.

If the price war is real, is [360Buy] fully prepared for that? If it isn’t real, it will be difficult for the leadership to get a swift response of out its employees after this, because employees will be confused about the sincerity of the orders they’re getting. We’ve all heard the story of the boy who cried wolf.

So, depending on who you ask, China’s e-commerce price war is either good for everyone or bad for everyone. Of course, the whole thing looks to be a bit of a fraud anyway as it turns out Amazon — which isn’t participating in the mud-slinging price war — has prices lower than all of them!

[via Techweb (the image too)]