World News

Amazon to pull Chinese ecommerce arm due to pressure from rivals

Published on: April 18th, 2019

Amazon.com said it will shut its China online store by 18th July.

As reported by Reuters, the move underscores how home-grown e-commerce rivals have made it difficult for Amazon’s marketplace to gain traction in China. Consumer research firm iResearch Global said Alibaba Group Holding’s Tmall marketplace and JD.com controlled 82% of the Chinese e-commerce market last year.

Amazon shoppers in China will no longer be able to buy goods from third-party merchants in the country, but they still will be able to order from the United States, Britain, Germany and Japan via the firm’s global store. Amazon will wind down support for domestic-selling merchants in China in the next 90 days and review the impact on its fulfilment centres in the country, some of which it may close.

An Amazon spokeswoman said that the company would continue to invest and grow in China through its Amazon Global Store, Global Selling, Kindle e-readers and online content. Amazon Web Services, the company’s cloud computing unit that sells data storage and computing power to enterprises, will also remain.

US-listed shares of Alibaba and JD.com rose 1% on Wednesday after Reuters first reported the move, before paring gains later in the day. Amazon’s shares closed flat.

The withdrawal of the world’s largest online retailer – founded by Jeff Bezos, who later became the world’s richest person – comes amid a broader e-commerce slowdown in China. Alibaba in January reported its slowest quarterly earnings growth since 2016, while JD.com is responding to the changing business environment with staff cuts.

It also follows the Chinese e-commerce retreat of other big-name Western retailers. Walmart sold its Chinese online shopping platform to JD.com in 2016 in return for a stake in JD.com to focus on its brick & mortar stores. Amazon bought Chinese online shopping website Joyo.com in 2004 for $75m, rebranding the business in 2011 as Amazon China. But in a sign of Tmall’s dominance, Amazon opened an online store on the Alibaba site in 2015.

Amazon is still expanding aggressively in other countries, notably India, where it is contending with local rival Flipkart.

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