Amazon seems to see yet another opening at the Chinese market. The company is at least hiring at every level. South China Morning Post (which is owned by Alibaba):
The online retail giant lists almost 400 Chinese-based openings on its careers website and more than 900 on LinkedIn. They include senior executives to manage and acquire content, a leader to expand its fledgling Amazon Lending programme and a head for its storefront on Alibaba’s Tmall. And it’s hiring a hardware engineer to, among other things, evangelise for digital assistant Alexa, which works with third party products even though the Echo speaker is not available in China.
Amazon has been beaten severely in China..:
Its sales represented just 1.1 per cent of China’s online gross merchandise value in 2015, and by 2016 that figure had dropped to 0.8 per cent, according to an ICBC note that cited iResearch.
..but it seems that cross-border commerce looks like a possible savior for Amazon, being able to bring foreign goods to Chinese customers:
But Amazon has used its global reputation to keep a foothold in the business of importing goods for China’s rising middle class, who seek safe foods and authenticity. In the fourth quarter of 2016, Amazon controlled 7 per cent of the country’s cross-border commerce, according to ICBC. It launched its Prime free-shipping service in late 2016. […]
Ocean Audit, which tracks the global movement of goods, said Amazon imported 14,885 shipping containers’ worth of goods in 2016. This year it’s predicted to reach 20,000, according to Chief Executive Officer Steve Ferreira.
Amazon also is building out its content / entertainment arm to better compete with Alibaba et al:
Beyond e-commerce, it’s building a Chinese content team to woo studio heads and negotiate deals for local movies and TV shows, including original content. But launching a domestic video service would be a bold step in a country where media is heavily censored by regulators. Netflix chose to sell content to local player iQiyi instead of entering the market directly, while Apple’s movie service has been blocked since 2016.
Does this make sense strategically?
The Chinese market is huge, let‘s just state the obvious right here. Even a sliver of that market is very valuable. But going against Alibaba, JD.com and a growing ecosystem of homegrown Chinese giants will keep being expensive and risky. (It also seems unlikely that Chinese regulators will ever allow a foreign company to get anything close to being a market leader.)
Amazon is fighting a long and costly battle in India. There and elsewhere Softbank and its $100 billion private equity Vision fund have emerged as a strong adversary. Microsoft and other big companies keep putting money into Amazon competitors as well.
And the company just made the biggest acquisition yet in its home market.
It does not really look Amazon needs yet another epic fight for marketshare. It makes sense to not give up completely on the Chinese market. And the cross-border commerce opportunity begs to be exploited.
But I would be very surprised and a little bit concerned if the company would go all-in again in China.
More on this topic:
* Amazon’s New Nemesis: Softbank Pouring Billions Into Each Flipkart, Snapdeal AND Paytm
* Fanatics and the Rise of E-Commerce Top Investor Softbank
* Amazon’s Ruthlessness and Growing Power Across Industries Creates Powerful Enemies
* The Implications of Amazon’s New-Found Financial Firepower
* 5 Reasons Why China’s Online Retail Is so Successful AND Structurally Ahead of the West