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PUBLISHED : Friday, 14 December, 2012, 12:19pm
UPDATED : Friday, 14 December, 2012, 12:19pm

Amazon turns up China press with Kindle

BIO

Doug Young has lived and worked in China for 15 years, much of that as a journalist for Reuters writing about Chinese companies. He currently lives in Shanghai where he teaches financial journalism at Fudan University. He writes daily on his blog, Young’s China Business Blog (www.youngchinabiz.com), commenting on the latest developments at Chinese companies listed in the US, China and Hong Kong. He is also author of a new book about the media in China, “The Party Line: How the Media Dictates Public Opinion in Modern China.”
 

Media are buzzing with the latest news on Amazon (Nasdaq: AMZN) in China, which is turning up the heat in the country's overheated e-commerce space with the opening of a store on its Chinese site selling electronic books for its Kindle tablet PCs. Since Kindle products are not yet available in China, the site also offers free software that allows consumers to read Kindle-formatted books using other devices, including Apple (Nasdaq: AAPL) smartphones and tablet PCs, and similar devices based on Google's (Nasdaq: GOOG) popular Android operating system.

 

Not surprisingly, this launch of the Kindle store has added to rumors that started appearing last month that Amazon was preparing to launch its Kindle tablet PCs in China. Such a move now looks almost inevitable, and I would expect to see such a launch early next year sometime.

This new initiative will provide fresh headaches for struggling e-commerce firm Dangdang (Nasdaq: DANG), which was once a sector leader and first rose to prominence as an online bookseller that led some to call it a Chinese Amazon. Dangdang is already facing growing pressure from a number of other major players that have recently started selling books online, including e-commerce giants Jingdong Mall and Suning.com (Shenzhen: 002024).

From a bigger picture perspective, this Kindle move looks like the latest push by Amazon to rapidly build up its presence in China's e-commerce market, as it tries to pose a serious challenge to Jingdong Mall and even sector leader Alibaba. Amazon formally changed the name of its longtime China site, Joyo.com, to Amazon.cn about a year ago, and also rapidly built up a series of massive new logistic centres to help it deliver its products in a day or less to customers in major cities like Beijing, Shanghai and Guangzhou. 

Those efforts are beginning to bear fruit as the company rapidly becomes a major new force in China's e-commerce scene. From my own street-level view, the presence of Amazon-branded delivery motorcycles, cars and bicycles has become very noticeable over the last half year, as the company also builds up its own massive fleet of vehicles to deliver its products.

 

This addition of Kindle products will help to boost its position by providing not only a sophisticated e-book product, but also by bringing its popular Kindle tablet PCs to the market. If and when that happens, Amazon will inevitably put software on its Kindle tablets that naturally guides users to its China online store, much the way that the Internet Explorer web browser muscled its way to global dominance due to its inclusion by Microsoft in all of its Windows products.

Meantime, I'll finish this post with another interesting e-commerce item that yet again highlights how competitive the space has become. In this quirkier case, media are reporting that oil refining major Sinopec (0386.HK; Shanghai: 600028; NYSE: SNP) is getting into the e-commerce space, with plans to sell gas and other petroleum products online, as well as more general merchandise. The program is being tested in Guangdong province first, and a company spokesman says the company is aiming for more than 10 billion yuan in sales next year.

I won't comment too much on this initiative, since it looks like a mostly "me too" move that will inevitably fail since few consumers will want to buy gasoline online. But it does highlight the fact that e-commerce is dangerously overheated, with the pressure unlikely to ease for at least a year or 2 due to the backing of such cash-rich players as Amazon and Sinopec.

Bottom line: Amazon's opening of a Kindle store is likely to presage the launch of its Kindle tablet PCs in China early next year, putting new pressure on Dangdang, Jingdong Mall and Alibaba.

 

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This article is now closed to comments

NickyDavies
Amazon has the best price on all of the Kindle Models - check it out! ****amzn.to/TSw0AF
corygoldblatt
Can someone please explain to me why someone would want to buy gasoline online? Only in China....
richard.evans.129794

Launch of Kindle store in China by Amazon, will open the market for Kindle
Fire.....****www.guessn.com/g/13730157
 
 
 
 
 

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