BEIJING - Yihaodian, the online supermarket whose investors include Wal-Mart Stores Inc, may choose the United States for an initial public offering as it expands to challenge Chinese rivals including Alibaba Group Holding Ltd's Taobao.

The Shanghai-based retailer aims to break even in three years and will "most likely" sell shares to the public in the US, said Chairman Yu Gang, who co-founded the company in 2008 after working as a supply chain executive at Dell Inc and Amazon.com Inc. There is no timetable for the sale, he said.

Yu expects to conclude the Wal-Mart investment agreement this month as Yihaodian aims for a larger slice of China's online commerce market, which CLSA Ltd estimates will almost double to 904 billion yuan ($140 billion) next year. Baidu Inc, China's most popular search engine operator, and Sina Corp, which owns the nation's third most-visited website, are among China-based companies that have chosen the US for initial public offerings.

"We'll do whatever it takes to secure a bigger slice of the market," Yu, 52, said in an interview on July 1. "Market share is our top priority."

Sales have been increasing by about 28 percent a month on average, a pace Yu said he expects the company to maintain.

Even at that rate, the online retailer has far to go to catch the market leaders, said Jim Tang, an analyst at Shenyin & Wanguo Securities Co in Shanghai.

"The rule for the e-commerce sector is that only the big get bigger," Tang said. The challenge for Yihaodian is to boost its transaction volume and grab a bigger market share so that it can control costs, including those for purchasing, marketing and logistics, he said.

Taobao Mall led China's business-to-consumer online market with 30 billion yuan of transactions in 2010, followed by 360buy Jingdong Mall with 10 billion yuan, according to iResearch Inc. Yihaodian ranks 10th, according to data from the Beijing-based research company.

Among China-based companies listed on US exchanges, the four largest by market value are the Internet businesses, Baidu Inc, Sina Crop, Netease.com Inc and Ctrip.com International Ltd, according to Bloomberg data.

Bloomberg News