Skip to main content

Newegg discusses implications of pending Chinese investment deal

(Image credit: Jason Howie via Flickr)
Audio player loading…
Image credit: Jason Howie via Flickr. Click for original.

Heading into this past weekend we said we were still gathering information on a report that Newegg was in the process of being owned by a Chinese technology company. As the story went, Hangzhao Liaison Interactive Information Technology Co., Ltd. (Liason Interactive for short) was making a sizable investment that would give it a majority stake in the California company. Since then, a Newegg official has confirmed with us that there's a pending deal. He also offered up some clarification on the details and insight into what to expect.

First of all, the deal is for $263 million, not $2.63 billion, according to Merle McIntosh, SVP of Sales and Marketing at Newegg. That's seems surprisingly low to us considering its last reported revenue was $2.7 billion in 2013. Regardless, it's enough to make Liason Interactive the majority owner, if in fact the deal closes. McIntosh also reiterated that nothing is yet finalized, saying the deal is still in progress as it awaits regulatory approval.

Assuming it does, then what? As some of our readers noted in the comments section of our previous article, Newegg has founding ties to China. The company's founder, Fred Chang, was a U.S. immigrant from Taiwan when he created the privately held online retailer in 2001 (there's an interesting article in the Los Angeles Times (opens in new tab) from 2007 that chronicles Newegg's beginning and rapid rise as a popular computer parts vendor). So, it's perhaps not surprising that Newegg would strike a deal making it a Chinese subsidiary.

It's the implication of the deal that's of concern. While Newegg has plenty of competition these days, not the least of which is Amazon with its free two-day shipping for Prime members, it's still a popular online shop for computer parts and all sorts of electronic devices. A new majority owner from across the globe could signal a series of changes, and not necessarily for the better. Should you be worried? Not According to McIntosh, who says there won't be any change in management if and when the deal closes.

"While Liaison Interactive will own a majority stake in Newegg after the deal closes, it will be business as usual for us. Liaison has a track record of investing in companies and keeping management in place. The same will be true for Newegg. We will continue to put our customers first and provide the best selection and customer service for our tech-focused shoppers," McIntosh told PCGamer.

Back in September, Newegg acknowledged that it was receiving a "sizable investment" from Liason Interactive, though it didn't mention becoming a subsidiary. At the time, Newegg said the cash infusion would help accelerate its strategic initiatives, among them a broader a international expansion and an aggressive push into core markets such as esports, virtual reality, and augmented reality.

There's been nothing to indicate that those plans have changed. At this point, all we can do is wait and see how things turn out.

Where do you buy your PC components, Newegg or Amazon, or?

Paul has been playing PC games and raking his knuckles on computer hardware since the Commodore 64. He does not have any tattoos, but thinks it would be cool to get one that reads LOAD"*",8,1. In his off time, he rides motorcycles and wrestles alligators (only one of those is true).