Dangdang to Jumei Tumble on China’s Fake Goods Crackdown

Chinese online retailers from E-Commerce China Dangdang Inc. to Jumei International Holding Ltd. dropped in U.S. trading on concern a government campaign against sales of counterfeit goods will crimp revenue.

Dangdang tumbled 6.2 percent to cut this year’s rally to 25 percent, while online beauty product seller Jumei slid to a three-week low. JD.com Inc., China’s second-largest shopping site, declined for a second day, trimming gains since its U.S. debut to 36 percent. The Bloomberg China-US Equity Index sank 0.7 percent to 105.10 in New York.

China will run a campaign from July to November to crack down on trademark infringements and sales of fake goods on the Internet, according to a notice on the State Administration for Industry and Commerce’s website yesterday. The actions will target online transaction platforms and group-buy websites, the agency said. Vipshop Holdings Ltd., a Guangzhou-based online fashion goods seller, retreated after posting a 126 percent surge in the year to June 18.

The sale of fake and pirated goods “is always a potential risk for shopping websites in China,” Jeff Papp, senior analyst at Oberweis Asset Management Inc., which oversees $1 billion in Lisle, Illinois, said by e-mail. “It may be just a reason for some profit-taking as all have done quite nice lately.”

Dangdang’s American depositary receipts fell to $11.92 in New York for the steepest slump in a month. Jumei slid 4.2 percent to $25.30, cutting its advance since last month’s U.S. listing to 15 percent.

Trading Halt

Vipshop sank 2.2 percent to $184.87 in New York, dropping for the first time in four days. ADRs of JD.com slipped 2.6 percent to $25.83.

Trading of China Mobile Games & Entertainment Group Ltd. was halted after the shares tumbled 23 percent, the biggest drop since its U.S. debut in September 2012.

Nine senior managers at the Guangzhou, China-based company were suspended, including President Shuling Ying, for alleged involvement in bribery with game developers, Chao Wang, a Hong Kong-based analyst at Nomura Holdings Inc., wrote in a note, citing a China Mobile Games conference call.

The iShares China Large-Cap ETF, the largest Chinese exchange-traded fund in the U.S., dropped 0.9 percent to $37.93, declining the most in eight weeks. The Standard & Poor’s 500 Index rose 0.1 percent to a record, extending gains after the Federal Reserve’s vow to keep interest rates low amid signs of an economic recovery.

The Hang Seng China Enterprises Index slid 0.9 percent to 10,354.06 in the biggest slump in a month. The Shanghai Composite Index dropped 1.5 percent to 2,023.74.

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