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Amazon.com Inc.， the world’s largest online retailer， confirmed on April 18 that it will close its marketplace for thirdparty sellers in China on July 18， according to a statement from the company. That means customers of Amazon.cn， or Amazon China， will no longer see products from local third-party sellers and will only be able to purchase products from Amazon’s cross-border e-commerce platform Global Store.
Amazon claimed it will not withdraw from the Chinese market， but will focus on the Global Store， the merchant selling division Global Selling， the Kindle devices and content business， as well as cloud-based Amazon Web Services in China.
“After the adjustment， Amazon will almost give up the Chinese market， and in the Amazon system， Chinese sellers will only serve as suppliers to foreign ecommerce markets，” said Tang Xin， an independent information technology analyst， in an interview with The Beijing News.
Amazon is the newest name on a growing list of international tech companies that have failed to localize their Chinese business， which also includes eBay， Yahoo and Uber.
In contrast to its contraction in China， Amazon’s global business is growing quickly. According to its annual report， the company’s revenue across all businesses totaled $232.89 billion in 2018， a surge of 30.9 percent from 2017， while its net income rose by 232.3 percent to $10.07 billion in the same period.
Losing ground
In August 2004， Amazon announced it had acquired Joyo.com， the largest online retailer in China at the time， for $75 million. Since then， China has become Amazon’s major local market after the United States， Canada， France， Germany， Japan and the UK.
However， Amazon didn’t maintain advantages in the Chinese market for long. It soon ran across challenges from local rivals. In the fi rst half of 2003， the Alibaba Group launched its customer-to-customer （C2C） platform Taobao.com， and in the second half of the year its Internet-based payment service Alipay went online. JD.com， a major rival of Amazon China’s business-tocustomer （B2C） business， secured over $10 million in fi nancing in 2007， greatly boosting its business growth.
Facing fi erce competition from Chinese companies， Amazon China’s market share continued to decline. According to a report by The Beijing News， in 2008， it held 15.4 percent of the online shopping market in China， but its share shrunk to 2.1 percent in 2014 and 1.3 percent in 2016. A report released by U.S.-based market research company eMarketer in June 2018 said Amazon China accounted for only 0.7 percent of China’s online retail sales. Tang said Amazon China’s user experience and competitiveness are far behind its Chinese rivals. “It is very likely that Amazon didn’t give enough attention and support to the Chinese market， but only attempted to duplicate its global model. Failing to localize operations is the reason why several other multinational corporations in China have fallen short，” Tang said.
A recent survey by The Beijing News found that 96.72 percent of the 60 respondents often purchase on Alibaba’s C2C platform Taobao.com， followed by 57.38 percent for JD.com and 18.03 percent for Amazon.cn. More than half of them shopped once on Amazon.cn， but not much afterward. Nearly 80 percent of those surveyed only logged into Amazon.cn once or twice in the past year， and about half of them said their shopping experience at Amazon.cn was mediocre.
Even in cross-border e-commerce， Amazon， with some natural advantages， faces powerful Chinese competitors.
In 2014， Amazon China launched the Global Store platform， where Chinese users can directly buy products from Amazon stores in other countries. As the company began shifting its focus from local to crossborder e-commerce， the new business soon became a core strategy for Amazon China. Later in 2016， the Amazon Prime service， the fi rst unlimited free cross-border shipping membership program operated globally， became available to Chinese customers.
Also in 2014， Alibaba launched Tmall Global， providing Chinese users imported commodities directly shipped from overseas. Kaola.com， the cross-border platform under Internet giant Netease， was launched in March 2016， and Xiaohongshu.com， combining social media and e-commerce， has been well received by young consumers since its establishment in 2013.
Figures from Analysys International， a Chinese Internet big data analysis product and service provider， showed that China’s cross-border import retail e-commerce market exceeded 381 billion yuan （$56.7 billion） in 2018， with Tmall Global and Kaola.com holding the largest shares.
“Cross-border e-commerce is a sector that most Chinese fi rms hope to make breakthroughs in，” said Tang. “Thus， Amazon will be facing increased pressure and challenges in this sector in the Chinese market.”
Not well localized
In light of competition from local online retailers in the Chinese market， Amazon didn’t react quickly enough due to its global structure. Amazon China’s senior management may have recognized the problems， but they could not make any decisions. “If the China chief of a company cannot decide everything， will execution be possible？ Ask [Wang] Hanhua， if he is able to achieve everything he wants. In contrast， I can，” said Richard Liu， founder of JD.com， in 2011. Wang was Amazon China’s president at the time. Yang Guoying， an independent fiscal commentator， told The Time Weekly， a news magazine based in south China’s Guangdong Province， that in contrast to the business-to-business model， the B2C model requires online retailers with stronger localization capability. However， when a user logs into Amazon.cn， he sees all the pages are directly copied from the global version of Amazon.com. This is quite different from what Chinese online retailers are doing. The difference between Amazon China and its rivals in marketing and user experience has already foreboded Amazon’s failure in the Chinese market.
“If Amazon placed enough importance on the Chinese market and positioned itself appropriately， it could change its differences from local companies into comparative advantages by relying on its unique global background，” Yang said.
However， Amazon may be too supercilious to think it is necessary to adapt to the Chinese market. In contrast to the fl exibility of local online retailers to market changes， Amazon China has to bow to its U.S. headquarters for decision-making.
According to Yang， this has created two problems. Decision-makers in the United States don’t understand the Chinese market well and the process of decisionmaking is too lengthy. “This has cost Amazon dearly，” Yang said.
Amazon claimed it will not withdraw from the Chinese market， but will focus on the Global Store， the merchant selling division Global Selling， the Kindle devices and content business， as well as cloud-based Amazon Web Services in China.
“After the adjustment， Amazon will almost give up the Chinese market， and in the Amazon system， Chinese sellers will only serve as suppliers to foreign ecommerce markets，” said Tang Xin， an independent information technology analyst， in an interview with The Beijing News.
Amazon is the newest name on a growing list of international tech companies that have failed to localize their Chinese business， which also includes eBay， Yahoo and Uber.
In contrast to its contraction in China， Amazon’s global business is growing quickly. According to its annual report， the company’s revenue across all businesses totaled $232.89 billion in 2018， a surge of 30.9 percent from 2017， while its net income rose by 232.3 percent to $10.07 billion in the same period.
Losing ground
In August 2004， Amazon announced it had acquired Joyo.com， the largest online retailer in China at the time， for $75 million. Since then， China has become Amazon’s major local market after the United States， Canada， France， Germany， Japan and the UK.
However， Amazon didn’t maintain advantages in the Chinese market for long. It soon ran across challenges from local rivals. In the fi rst half of 2003， the Alibaba Group launched its customer-to-customer （C2C） platform Taobao.com， and in the second half of the year its Internet-based payment service Alipay went online. JD.com， a major rival of Amazon China’s business-tocustomer （B2C） business， secured over $10 million in fi nancing in 2007， greatly boosting its business growth.
Facing fi erce competition from Chinese companies， Amazon China’s market share continued to decline. According to a report by The Beijing News， in 2008， it held 15.4 percent of the online shopping market in China， but its share shrunk to 2.1 percent in 2014 and 1.3 percent in 2016. A report released by U.S.-based market research company eMarketer in June 2018 said Amazon China accounted for only 0.7 percent of China’s online retail sales. Tang said Amazon China’s user experience and competitiveness are far behind its Chinese rivals. “It is very likely that Amazon didn’t give enough attention and support to the Chinese market， but only attempted to duplicate its global model. Failing to localize operations is the reason why several other multinational corporations in China have fallen short，” Tang said.
A recent survey by The Beijing News found that 96.72 percent of the 60 respondents often purchase on Alibaba’s C2C platform Taobao.com， followed by 57.38 percent for JD.com and 18.03 percent for Amazon.cn. More than half of them shopped once on Amazon.cn， but not much afterward. Nearly 80 percent of those surveyed only logged into Amazon.cn once or twice in the past year， and about half of them said their shopping experience at Amazon.cn was mediocre.
Even in cross-border e-commerce， Amazon， with some natural advantages， faces powerful Chinese competitors.
In 2014， Amazon China launched the Global Store platform， where Chinese users can directly buy products from Amazon stores in other countries. As the company began shifting its focus from local to crossborder e-commerce， the new business soon became a core strategy for Amazon China. Later in 2016， the Amazon Prime service， the fi rst unlimited free cross-border shipping membership program operated globally， became available to Chinese customers.
Also in 2014， Alibaba launched Tmall Global， providing Chinese users imported commodities directly shipped from overseas. Kaola.com， the cross-border platform under Internet giant Netease， was launched in March 2016， and Xiaohongshu.com， combining social media and e-commerce， has been well received by young consumers since its establishment in 2013.
Figures from Analysys International， a Chinese Internet big data analysis product and service provider， showed that China’s cross-border import retail e-commerce market exceeded 381 billion yuan （$56.7 billion） in 2018， with Tmall Global and Kaola.com holding the largest shares.
“Cross-border e-commerce is a sector that most Chinese fi rms hope to make breakthroughs in，” said Tang. “Thus， Amazon will be facing increased pressure and challenges in this sector in the Chinese market.”
Not well localized
In light of competition from local online retailers in the Chinese market， Amazon didn’t react quickly enough due to its global structure. Amazon China’s senior management may have recognized the problems， but they could not make any decisions. “If the China chief of a company cannot decide everything， will execution be possible？ Ask [Wang] Hanhua， if he is able to achieve everything he wants. In contrast， I can，” said Richard Liu， founder of JD.com， in 2011. Wang was Amazon China’s president at the time. Yang Guoying， an independent fiscal commentator， told The Time Weekly， a news magazine based in south China’s Guangdong Province， that in contrast to the business-to-business model， the B2C model requires online retailers with stronger localization capability. However， when a user logs into Amazon.cn， he sees all the pages are directly copied from the global version of Amazon.com. This is quite different from what Chinese online retailers are doing. The difference between Amazon China and its rivals in marketing and user experience has already foreboded Amazon’s failure in the Chinese market.
“If Amazon placed enough importance on the Chinese market and positioned itself appropriately， it could change its differences from local companies into comparative advantages by relying on its unique global background，” Yang said.
However， Amazon may be too supercilious to think it is necessary to adapt to the Chinese market. In contrast to the fl exibility of local online retailers to market changes， Amazon China has to bow to its U.S. headquarters for decision-making.
According to Yang， this has created two problems. Decision-makers in the United States don’t understand the Chinese market well and the process of decisionmaking is too lengthy. “This has cost Amazon dearly，” Yang said.