Corporate China | Amazon in Shanghai, Wal-Mart in drugstores

Two of the world's biggest retailers are in the e-commerce headlines, led by a move into Shanghai's new pilot free trade zone by global giant Amazon (Nasdaq: AMZN). At the same time, Wal-Mart-controlled (NYSE: WMT) Yhd has become China's first e-commerce firm licensed to operate online drugstores, giving it a potential edge over other rivals also eying the space. Both of these stories highlight how the big international names are trying to use their clout and global connections to carve out a space in China's fast growing but highly competitive e-commerce space, which is now dominated by the domestic pair of Alibaba and JD.com (Nasdaq: JD).

This new initiative will see Amazon's global unit open a shop in the FTZ selling goods available from its main site at Amazon.com, to take advantage of the zone's preferential trade policies. Users will be able to pay for goods using local currency, and Amazon is promising competitive prices, including relatively fast shipping times for the imported goods. I suspect that Amazon will import and store many of the most popular goods in the zone, enabling it to make quick shipments after actual orders are placed.

The move makes Amazon one of the first major non-financial companies to set up shop in the FTZ, which has made nonstop headlines over the last year as more details emerge on what exactly it will offer. Preferential import duties appear to be one of the biggest benefits, which is why Amazon is making this move.

This kind of step plays to Amazon's strength as an international company, since it will now be able to offer Chinese consumers a wider range of imported products at attractive prices that they can't find on the big domestic sites. Amazon still has a long way to go before posing a serious challenge to Alibaba or even JD, but at least this kind of move will help it to differentiate itself as a different kind of e-commerce company for Chinese consumers.