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The Amazon of China defied the down-round blues. With a new investment round unveiled last week, e-commerce upstart 360buy.com, aka Jingdong Mall, saw its valuation swell by 15 per cent in a year. Despite widening losses, venture capital continues to pour money into China's crowded e-commerce space. But as players feverishly compete for market share by discounting, profits look ever more elusive.

After snagging another $300-million (U.S.) from Tiger Global and Ontario Teachers Pension Fund, 360buy is now valued at some $7.6-billion. That's up from $6.6-billion a year ago, when Digital Sky Technologies, Sequoia Capital, Tiger and the family controlling Wal-Mart injected capital, despite speculation among VCs in China that Jingdong would struggle to raise money at a higher value.

Trouble is, more money is likely to lead to more promotions. Heated competition and widespread discounting by new entrants pushed early comers, such as Dangdang, into the red. Analysts don't expect the online bookseller to turn a profit until 2015. Jingdong's loss is expected to widen in 2012 to $300-million as it strives to triple its sales and catch up with Alibaba's Tmall. Online clothier Vancl's goal to become profitable in the fourth quarter still looks a tall order.

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New arrivals in recent years have led to more frenzied competition. Amazon and Wal-Mart have both invested in local players. Even eBay is mulling a return to the Middle Kingdom, inking a recent partnership with domestic luxury goods site Xiu. Meanwhile, domestic electronics chains Suning and Gome, as well as China's most valuable Internet firm Tencent, have launched their own online shopping sites.

Alibaba, thanks to its first-mover advantage, still leads the pack. Its Tmall and Taobao sites saw $3-billion combined sales in just 24 hours on Nov. 11. That makes their "Double Eleven" sales worth more than double America's entire "Cyber Monday" shopping spree, which brought in $1.3-billion in 2011, according to ComScore.

The market's growth makes it alluring. Last year, e-commerce volumes in China rose 29 per cent year on year to almost $1-trillion, or 13 per cent of GDP, as generous investments like 360buy's have enabled uncompetitive players to tough it out. 360buy's existing investors, along with its promotion-addicted customers, may cheer another up-round. But at some point the industry must learn to support itself beyond equity capital.

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