A Dangdang bookstore in Fuzhou, East China's Fujian Province Photo: VCG

A lack of managerial vision and belated, defensive moves to diversify in e-commerce have driven dangdang.com into the arms of a little-known investment company, and experts said on Sunday the move is a sad but necessary step for the Chinese online book seller.

The company, which was set up in November 1999, will likely be acquired by Tianhai Investment, a Tianjin-based electric component seller, according to a filing Tianhai Investment sent to the Shanghai Stock Exchange on Saturday. Domestic airline company HNA Group holds about 20 percent of Tianhai Investment.

According to the filing, Tianhai Investment plans to issue shares to "buy assets" from Dangdang, but the details of the deal are still under discussion.

Dangdang said that it had been a unicorn in the cultural e-commerce sector and profits had surged in recent years. "Dangdang has always been chased by capital," it said in a statement it sent to the Global Times on Sunday. It didn't give further information about the acquisition deal or its general financial performance in 2017. 

Dangdang was listed on the Nasdaq stock exchange in 2010 but delisted and went private in 2016.

Experts contacted by the Global Times expressed a pessimism over Dangdang's business prospects. Li Yi, a senior research fellow at the Internet Research Center under the Shanghai Academy of Social Sciences, told the Global Times on Sunday that the deal with Tianhai will be a "combination of two relatively weak businesses."

"Tianhai Investment is not a very well-known company, nor does it engage in a business with very high returns. I think it intends to drive up its share price by introducing the e-commerce concept [via cooperation with Dangdang] into its business. For Dangdang, it's a chance to raise capital to support its business," he said.

There have also been recent reports about HNA Group being mired in debt woes.

Liu Dingding, a veteran industry analyst, said that it's evident Dangdang "has hit a wall" and it might not get any better acquisition offer.

Starting with online book sales, in recent years Dangdang expanded its business to other goods including food, electric appliances and sports equipment. 

"Dangdang's business shift was a little late, and its 'strategy' was more like a passive reaction to the rise of e-commerce giants like JD.com, which sells similar products like Dangdang but with much more success," Liu told the Global Times on Sunday.

"On the whole, I think Dangdang's business strategy has always been a defensive one without enough ideas of innovation and exploration," he said.

A Shanghai resident who would only give her surname as Zhang told the Global Times on Sunday that she had long ago stopped buying books on Dangdang as she found other options.

"I once downloaded Dangdang's app, found that the book prices were no lower than those offered by other e-commerce platforms like JD.com, and I quickly deleted the app," she said.

According to Li, the shrinking book market in China is a negative factor, but it can't be the whole reason for Dangdang's decline. "Other platforms like Amazon can succeed by selling books. The problem with Dangdang is a lack of insight among its management team," he said.

Liu said that examples like Dangdang are plentiful in the e-commerce world, with many platforms rising, fading and eventually dying.

"The e-commerce sector will sift out the less competent companies, but it will always incorporate new ones. It is not an industry where only big players can survive," Liu said.

However, Liu said, Dangdang will probably get a new lease of life with its cooperation with HNA through the latter's big customer base.