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C. Custer · · 7 min readWhy it’s smart for Amazon to quit China
This is an adapted translation of this article by Wang Xinxi, originally published by Sina Tech.
This month, Amazon announced that it would soon shutter its Chinese ecommerce business.
As Amazon closes down in China, however, it’s doubling down on India.
India’s new ecommerce regulations apparently haven’t stopped Amazon’s recruitment drive there, and a report in India’s Navhind Times suggests that the American giant has been shifting its resources and focus towards India as it sees less hope of ever catching Chinese ecommerce giants Alibaba and JD domestically.
Photomontage by Tech in Asia / Photos by UN Climate Change and Amazon
The Chinese market has been tough on Amazon. It has been outmatched by local giants like Alibaba in terms of ecommerce services, which offers a better shopping experience, has a broader selection of merchants and products, has better logistics, and better retail connections. Moreover, while Amazon was able to shed the “bookseller” label in its native US long ago, it has never quite shaken that branding in China, which has made expansion difficult.
In short, Amazon was never able to fully localize successfully.
This is not an uncommon phenomenon; many foreign tech giants have entered China in the past and failed. One major reason is that they don’t understand the rules of the Chinese market or Chinese consumers, and they’re often stubborn and unwilling to change. They copy their products directly to China, with predictable results.
None have managed to break this “China curse.”
Amazon and Alibaba enjoy similar volumes in the global market, but the gap between them in China’s domestic market is enormous. And while Amazon hasn’t been unwilling to invest in expansion, at this point it really has no hope in China.
At its peak, Amazon enjoyed a 15% domestic market share, but that has shrunk to less than one percent today thanks to the tough domestic competition.
Photo credit: Amazon
It’s not just Alibaba and JD, either: many other ecommerce companies, including smaller niche firms, have all participated in cutting down the size of Amazon’s slice to the point where it is now completely marginalized.
India’s prospects
Penny pinching
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