How Amazon wants to crack China -- starting in Alibaba’s hometown

Retail giant has struggled to find its place in a market dominated by Alibaba and JD.com

E-commerce

Karen Chiu

Published: 5:34pm, 29 Jun, 2018

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This article originally appeared on ABACUS

This week, a curious visitor showed up in Alibaba’s hometown.

Amazon threw an event in Hangzhou, inviting Chinese manufacturers to meet with thousands of online merchants from around the world. According to Chinese media, attendants heard tips on how to prepare for Black Friday and other busy holiday shopping days in the US and Europe.

Just as Alibaba has found little success with its e-commerce services in the US, Amazon has found it difficult to crack the Chinese market too. More than 80% of online shoppers in China buy from either JD.com or Alibaba’s Tmall, while Amazon only makes up less than 1% of the market. Domestic giants are so dominant that Amazon even opened a store on Tmall.

(Abacus is a unit of the South China Morning Post, which is owned by Alibaba.)

Amazon entered China in 2004 after purchasing online retailer Joyo.com, which was founded by Lei Jun who went on to launch Xiaomi. (Picture: AP Photo)

Now it looks like Amazon might be changing tactics: Instead of just trying to sell to Chinese consumers, it’s also trying to help small businesses in China and abroad -- by using Amazon’s services to sell their products.

One way to attract Chinese merchants to its platform could be by giving them loans to grow their businesses. CNBC spotted a job posting on Amazon’s site from last week, seeking a manager in China for its lending program. (The ad has since been taken down.)

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Amazon’s strategy isn’t unique. Rival Alibaba also has its eyes on cross-border sales -- in the opposite direction.

Then-US-president-elect Donald Trump meeting with Alibaba’s Jack Ma at Trump Tower on January 9, 2017. (Picture: Getty Images/AFP)

Last year, Alibaba enlisted Martha Stewart for a two-day event in Detroit to entice small US merchants to sell to China’s growing middle class. It followed a meeting in New York with US President-elect Donald Trump, where chairman Jack Ma promised to help 1 million small American businesses ship their goods to China.

“What we’re trying to do in the United States, is to get small businesses and farmers to see how big of a market there is in China,” said Alibaba vice chairman Joe Tsai at this year’s Code Conference. “Your average consumer now cares about buying better food, healthier products and things like that. So, they’re looking outside of China to bring in more imports.”

The Chinese market -- with a population more than four times that of the United States -- is one that few tech giants are willing to give up. Last week Google announced it was investing US$550 million in JD.com, in a partnership that would see JD.com products being promoted on Google’s shopping service.

Google’s new Chinese partner, JD.com, is an online retail titan

For more insights into China tech, sign up for our tech newsletters, subscribe to our Inside China Tech podcast, and download the comprehensive 2019 China Internet Report. Also roam China Tech City, an award-winning interactive digital map at our sister site Abacus.

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