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Amazon to shut its online store in China by July 18

File photo. Photograph:( Reuters )

Reuters China Apr 23, 2019, 06.43 AM (IST)

Amazon announced last Thursday that it will shut its China online store by July 18 and will no longer operate a marketplace, nor provide seller services on Amazon.cn.

The Amazon spokeswoman said that the company would continue to invest and grow in China through its Amazon Global Store, Global Selling, Kindle e-readers, and online content. Amazon Web Services, the company's cloud computing unit that sells data storage and computing power to enterprises, will also remain.

Amazon entered the Chinese market in 2004 by merging with China's e-commerce platform Joyo. In the first few years, it's operations included providing a platform for Chinese businesses to open online stores aimed at international buyers, along with selling paper books, e-books and its e-reader Kindle, and its AWS cloud computing services.

With the rise of China's local e-commerce companies, Amazon's market share in China's business to consumer (B2C) online retail platform has been continuously diluted.

"Can you fight with the equal tenacity and methods as local competitors? Are you incentivizing your team the same way that a Chinese company is? Or is there a glass ceiling for the heads of the groups? There are all these complex issues that any American companies would have a hard time in China," said Li Kaifu, the founder and CEO of Sinovation Ventures about some of the issues American companies face in China.

Ker Zheng, marketing specialist at Shenzhen-based e-commerce consultancy Azoya, told Reuters that Amazon had no major competitive advantage in China over its domestic rivals. Unless someone is searching for a very specific imported good that can't be found elsewhere, "there's no reason for a consumer to pick Amazon because they're not going to be able to ship things as fast as Tmall or JD," he said.

While Amazon's moving on, other foreign brands seem to be adapting well to the Chinese market.

Though Apple suffered a slump in its earnings report for the first quarter of 2019, it remained competent in China's high-tech market. Apple CEO Tim Cook said he is grateful for China's opening-up policy as it allows more companies to become a part of this market at the annual China Development Forum (CDF) in Beijing on March 23, 2019.

KFC, the American fast-food restaurant chain giant, has won Chinese consumers' hearts since it entered the market in the 1980s. In 30 years, the brand has opened over 6,000 stores in the Chinese mainland, making up nearly 25 per cent of the fast-food industry market share in 2015, reported China Business Network.

Dyson's founder and chief engineer, James Dyson became the richest person in the UK thanks to his company's record-high revenue in 2018, according to the Bloomberg Billionaires Index released in January. The Asia market, led by China, which made up about 50 per cent of its profit, was a great contributor in boosting its business.
 

Story highlights

The Amazon spokeswoman said that the company would continue to invest and grow in China through its Amazon Global Store, Global Selling, Kindle e-readers, and online content.