Briefing: Amazon reportedly withdrawing from China

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Update: Amazon will cease support for third-party merchants on Amazon China’s website.

爆料:亚马逊将宣布退出中国 – 媒体训练营

What happened: Global e-commerce giant Amazon will exit from China, leaving only two businesses—Kindle and the cross-border selling unit—reported a Chinese media outlet citing people with knowledge of the matter. That means Amazon’s logistics unit and cloud service AWS may also be affected. An official statement on the matter will be released later this week, the source said, though a specific date is unknown.

Why it’s important: Through its acquisition of Chinese e-commerce site Joyo for $75 million in 2004, Amazon joined a group of rivals to tap China’s booming e-commerce industry. As a relatively early entrant, Amazon China had a good start with market share peaking at around 15% in 2008, but the site quickly lost ground to e-commerce giants such as Alibaba and JD.com. The cross-border e-commerce trend that surfaced around 2014 could have facilitated a comeback given its advantages in global selling and supply chain. But the company failed to rise to the challenge and was quickly surpassed not only by Alibaba and JD, but also to cross-border e-commerce upstarts like Xiaohongshu, NetEase Kaola, and Ymatou. Rumors about a potential merger between Amazon China and NetEase Kaola circulated earlier this year, but were never confirmed. Amazon China held a minuscule 0.6% of the market last year, according to research institute Analysys International. Amazon’s withdrawal is another to add to the long list of multinational companies such as Google, Uber, and eBay that have failed to tap the Chinese market. Reasons vary from localization issues to government interference.