China’s ecommerce giants threatened by parcel bombing spree

On the eve of its “Golden Week” holiday, China was struck by tragedy: a string of explosions that killed seven and injured dozens in Guangxi. 17 bombs in total exploded across Liucheng county, some of them at government offices. Police are already holding a suspect, and think he may have tried to wreak even more destruction. Liucheng police are reportedly saying they’ve found more than sixty suspicious packages.

Upon hearing the news, avid China watcher and MarketWatch founder Bill Bishop tweeted this:

time to short china ecommerce stocks like $Jd & $Baba on liuzhou bombing? if bombs through parcels expect delivery logistics "crackdown"?

— Bill Bishop (@niubi) September 30, 2015

I’ve got no idea whether this is good investment advice, but Bishop is certainly right to worry that China’s ecommerce companies could stand to lose quite a bit. China’s ecommerce industry has expanded rapidly in part thanks to the lightning-fast delivery services local companies can offer – deliveries of online orders can often arrive in just a few hours if you live in a major city. A government crackdown could change that.

A government crackdown does seem likely. Certainly China is not going to intentionally cripple the ecommerce industry; it’s clear the government sees it as a big part of the Chinese economy’s way forward. But China is also not going to allow government office bombings to happen without taking a look at how they happened, and how future bombing attempts can be prevented.

Given how quickly packages are delivered in China, it seems likely that lax security measures are an area where the government could tighten up. If it were to implement package inspection or scanning requirements, for example, that could slow down delivery for China’s ecommerce players, at least temporarily. And that, in turn, could lead more consumers to return to retail shopping for items they need to get quickly.

China’s on a national holiday now, and it will be for the next week. But when the nation ceases its National Day celebrations and returns to work, expect authorities to take a long, hard look at logistics. If they feel parcel delivery could be exploited for more bombings in the future, expect changes that could disrupt China’s ecommerce industry.