Amazon is still focused on breaking into the Chinese market, despite the inherent difficulties involved.
While Amazon’s pending launch in Australia has been a key talking point among domestic analysts, the company has been operating in China for a number of years.
However, as it has for most foreign companies, China’s proved a tough nut to crack.
The country’s retail market is dominated by domestic players Alibaba and JD.com, which together accounted for 67% of Chinese retail sales in 2016.
In 2016, Amazon had only 1.3% of the Chinese market — down from the 2% that it had in 2011. So despite having a base in China for at least six years, the company has been unable to gain any traction.
Contrast that against Amazon’s imminent arrival in Australia, which has been the talk of retail analysts and economists alike.
That local launch may come as soon as October, and most commentators agree that, at the very least, the company’s arrival is set to shake up the Australian retail landscape.
And as Amazon continues to expand internationally, it hasn’t given up on its Chinese operations.
According to a report by Bloomberg, the company is hiring for hundreds of China-based positions.
There are 400 positions advertised on Amazon’s website and 900 on LinkedIn, ranging from senior executives to hardware engineers.
While China’s restrictions on foreign-based companies have always made market-expansion difficult, Amazon had some success in accessing the Chinese market through cross-border transactions.
In other words, the company managed to leverage its global logistics platform to maintain some market share in China as an importer of foreign products.
As part of that strategy, Amazon is encouraging its network of more than 2 million merchants to utilise the company’s at international markets, rather than just focusing on the US.
Bloomberg cited research which said that Amazon controlled 7% of China’s cross-border transactions in 2016, after launching its subscription-based Amazon Prime service late last year.
The company is aiming to take advantage of demand for foreign products — which are often seen as safer or more authentic — from a rising Chinese middle class.
The CEO of Ocean Audit, a company which tracks moves in global shipping, told Bloomberg that Amazon is expected to send 20,000 shipping containers of goods to China in 2017, up from 14,885 last year.
Amazon has also advertised positions in Chinese digital content production, although an expansion into local TV and entertainment would appear difficult given China’s strict media regulations.
While progress in China is slow, it’s clear that the country is still a key feature in Amazon’s international expansion strategy.
In addition to its pending arrival in Australia, Amazon has also invested billions this year to expand operations in India and Singapore.
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