Dangdang, the Chinese online retailer launched its ebook service today with more than 50,000 books in its ebook store and 90% of which are priced under RMB 10 yuan (US$ 1.5 dollar).

360buy is also said to follow suit and launch its own ebook store in early next year with north of 80,000 books and 200 publisher partner for starters. Stiff competition and possible price war is about to spread to the e-reading forefront if more players step their toes into the market which is still in its infancy.

Shanda has been leading the area with its Bamboo ereader (launched last July) and bunch of online literature sites that have a combined 71.5% of China’s online literature market share.

Li Guoqing, co-founder and co-president of the Beijing-based e-tailer revealed in an interview that Dangdang planned to launch ereaders priced at RMB 499 (US$ 78) and RMB 299 (US$ 47) citing the overpriced e-readers in current market as a motivation.

As for the revenue model, Dangdang takes a cut of 40% from every book it sells.