Amazon shutting Chinese marketplace amid stiff competition

Amazon will keep running its other businesses in China, including Amazon Web Services, Kindle e-books and cross-border operations that help ship goods from Chinese merchants to customers abroad.
Amazon will keep running its other businesses in China, including Amazon Web Services, Kindle e-books and cross-border operations that help ship goods from Chinese merchants to customers abroad. PHOTO: REUTERS

SINGAPORE/SEATTLE/HONG KONG • In a rare retreat for Amazon.com, the e-commerce giant plans to shut down its Chinese marketplace business in July as it shifts its focus to offering mainland consumers overseas products, rather than goods from local sellers.

Amazon will keep running its other businesses in China, including Amazon Web Services, Kindle e-books and cross-border operations that help ship goods from Chinese merchants to customers abroad.

Starting on July 18, customers logging in to Amazon's Chinese Web portal, Amazon.cn, will see only a selection of goods from its global store rather than products from third-party sellers.

Pulling out of e-commerce in China - the world's largest retail market - represents a setback for both Amazon and chief executive Jeff Bezos, known for his willingness to weather losses in order to achieve long-term gains.

Amazon is the latest example of an American tech company in China struggling to contend with local leaders like Alibaba Group Holding and JD.com, as well as group buying app Pinduoduo, which went public in New York last year.

Amazon entered China in 2004 when it bought a local online bookseller for US$75 million.

It then invested in warehouses, data centres and programmes to teach Chinese sellers how to get their goods to Amazon customers.

 
 
 

Amazon launched its Prime membership programme there in 2016, hoping to lure Chinese customers with promises of high-quality Western goods and free international deliveries.

But extra perks like Prime Video, which has been used to woo customers in other markets, are unavailable to users in China.

Alibaba, JD and other Chinese platforms also ramped up their offerings of everything from American cherries to Australian baby formula, all with steep discounts.

Amazon's market share in China is less than 1 per cent, according to iResearch.

The pullback is the latest sign that Amazon is ceding China so it can focus on India, where it stands a better chance of becoming a dominant player.

The company has ploughed billions of dollars into the Indian market since opening its website there in 2013, building more than 50 warehouses to support the business.

But Amazon still has to contend with Chinese e-commerce players in India, where Alibaba and others are building up operations or investing in local start-ups such as Paytm E-commerce and BigBasket.

For now, Amazon's commitment to China remains strong and it will continue to invest in the country, according to a company spokesman.

She said it has been shifting the focus of its online retail business in China to cross-border sales, which cater to Chinese merchants selling to consumers abroad and to Chinese customers looking for high-quality goods from around the world.

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A version of this article appeared in the print edition of The Straits Times on April 20, 2019, with the headline 'Amazon shutting Chinese marketplace amid stiff competition'. Print Edition | Subscribe