China's growth fixation may cost it innovation

Mergers in China's e-commerce space, including Ctrip's tie-up with Qunar, are the default response to competition. A few giants now control vast swaths of the sector unopposed.

Ctrip and Qunar’s merger neatly wraps up any conundrum a family in China seeking to book a holiday might have. There will effectively be only one online travel agent in town once the $7 billion merger is complete.

The merger of Ctrip and Qunar, disclosed in a statement on Monday, will create an online travel powerhouse accounting for roughly 70%-80% of holiday bookings in China, according to Summit Research. It will enjoy a virtual monopoly in a fast-growing business sector. 

For the two companies the alliance makes a lot of sense. It offers economies of scale. Ctrip gains a strategic shareholder in Qunar owner Baidu,...

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