Amazon Has Announced It Will Exit The Chinese Market, What's The Reason?

Due to struggles against local rivals in the Chinese market, Amazon has made an announcement that it will shut down its online store in the country. According to the e-commerce giant, the shutdown will take place by July 18, 2019, and will focus on selling overseas cloud services and goods to the world’s largest market.

This move shows that the world-leading online shopping site faces difficulties in standing still in China. Meanwhile, Facebook hasn’t found a way to enter the market and Google is heavily criticized for planning to set its foot in China by censoring search.

A report from iResearch Global indicates that as of 2018, Alibaba Group Holding- owned JD.com and Tmall held 82 percent of e-commerce market share in the country. Talking to Reuters, Amazon said that it has started informing sellers about the shutdown and not to provide services to sellers on the Chinese platform. |A spokeswoman from the company said that it is working closely with sellers to make sure transitions are smooth and to keep delivering the best experience for customers.

Despite exiting the Chinese market, Amazon will still let sellers continue their business on its platform to sell outside of the country via Amazon Global Selling marketplace. Furthermore, China-based Amazon online buyers won’t be able to shop from the country’s third-party merchants; however, they can keep buying from other countries such as the UK, the US, as well as Japan through its global store.

Within the next 90 days, the e-commerce giant will stop supporting domestic sellers in the country. Also, it plans to assess the influence on its fulfillment centers here, where it may close some of them. Amazon made this decision because it has no competitive advantages to compete with domestic rivals. Ker Zheng, Azoya marketing specialist, said:

Following this exit, Amazon will continue selling in China through its Global Selling, Global Store, Kindle e-readers, as well as online content platforms. The company will also concentrate on Amazon Web Services that offer data storage and cloud services.

While the news may benefit local e-commerce firms like JD and Tmall, it also suggests a slowdown in Chinese online shopping.