Jeff Bezos said claim to the culture of failure: a form of wisdom that will be useful to him in the coming weeks, while the company he founded in 1994 to just take a difficult decision. According to sources cited by Reuters, Amazon plans to close its marketplace (marketplace) in China by mid-July. In practical terms, it will not be possible for chinese companies to sell their products in China on the site “Amazon.cn”. The U.s. is considering closing in the next three months its distribution centers and reduce its support to the chinese merchants, said one of the interviewees. “We work closely with our suppliers to ensure a smooth transition and continue to provide the best possible customer experience”, also said a spokesperson for Reuters, in a press release.
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The end of domestic operations does not, however, mean the cessation of all activities of Amazon in China: the chinese companies will be able to continue to export their products on the global sites of the group. Conversely, Amazon will also continue to sell foreign products in China, as well as its own cloud services, Amazon Web Services. In regard to the products sold from abroad, the american group that retains the advantage of its global network. Customers of Amazon in China, for example, can always buy the e-readers Kindle and content online.
Failure of growth and profitability
The decision emphasises, however, to what extent are the local rivals of the american giant have made it difficult for the conquest of the chinese market. According to iResearch Global, Alibaba and JD.com Inc controlled 81,9% of the chinese market last year. “They withdraw because they are neither cost-effective nor in growth,” said Michael Pachter, analyst at Wedbush Securities. Ker Zheng, marketing specialist at Azoya, a consulting firm in e-commerce based in Shenzhen, also explains that Amazon does not have any major competitive advantage in China compared to its national competitors. Unless someone is searching for a product imported very specific that cannot be found elsewhere, “there is no reason why a consumer would choose Amazon, because it will not be able to ship things as quickly as Tmall (Alibaba) or JD,” he said.
Amazon has purchased the chinese site Joyo.com for $ 75 million in 2004, and renamed as Amazon China in 2011. In a sign of the dominance of Tmall, Amazon had also opened an online shop on the website Alibaba from 2015.
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A difficult market for the giants of western
The removal of the largest online retailer in the world operates in a context of a general slowdown of e-commerce in China. In January, Alibaba has recorded the weakest growth of quarterly profits since 2016, while JD.com had to reduce its workforce. The us stock markets Alibaba and JD.com listed in the United States, rose 1% on Wednesday after Reuters announced the movement, before reducing their gains later in the day. Shares of Amazon closed at equilibrium.
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outside of the economy, the Middle kingdom is not an easy target, and there are many large western companies who are experiencing difficulties. Walmart Inc. has sold its platform of online shopping by chinese JD.com in 2016 (in exchange for an ownership interest in JD.com). Similarly, the us majors on the net – Google, Facebook, Netflix – are taking root with more difficulty than elsewhere.
