
Amazon Quits China Market - Pandaily
https://pandaily.com/amazon-quits-china-market-another-u-s-e-commerce-giant-failing-in-china/
======
ConfusedDog
As a person have actually used TaoBao, JD, and Amazon.cn, I can tell Amazon.cn
was far behind them on both execution and product variety. I only have a vague
impression of China's rules imposed on business, if they did, for sure Amazon
was screwed so badly it didn't move a single inch over the past few years.
Literally done nothing at all to compete. I'm not surprised they gave up.

~~~
contingencies
Never used _z.cn_ but saw a few neighbours ordering from them in Shenzhen.
Probably recent tech books in English I guess. I did try AWS in China and it
was _absolutely shocking_. Clearly they never prioritized China and the
inevitable happened. I run a business in China, it's not easy but it's
interesting.

~~~
mooreds
AWS in China is not run by AWS:

"To provide the best experience for customers in China and to comply with
China’s legal and regulatory requirements, AWS has collaborated with China
local partners with proper telecom licenses for delivering cloud services. The
service operator and provider for AWS China (Beijing) Region based out of
Beijing and adjacent areas is Beijing Sinnet Technology Co., Ltd. (Sinnet),
and the service operator and provider for AWS (Ningxia) Region based out of
Ningxia is Ningxia Western Cloud Data Technology Co., Ltd. (NWCD)."

[https://www.amazonaws.cn/en/about-
aws/china/](https://www.amazonaws.cn/en/about-aws/china/)

~~~
benzheren
As an active user of AWS China, let me tell you that don't take those words at
face value. AWS China business actually is growing really fast for past
several years.

~~~
mooreds
Sorry, which words do you mean?

------
seemuch
The discussion in this thread shows how blind people are about China's
development. They are pointing fingers to the Chinese government partly
because they simply cannot imagine how much better the China competitors are.
The US do have some advantages in the IT industry, but that advantage is
getting slimmer and slimmer. In fact, in so many ways, people in China are
enjoying much better services from the internet companies than people in the
US. But people in the US simply cannot see it, and cannot believe it. For
ordinary people, I don't blame them. But most of people on HN are from this
industry, and they are the same! This just makes me speechless.

~~~
manigandham
The China competitors are better because they are actively helped by the
government while foreign companies are not, and in this case actively
suppressed.

Competition only works when the market is fair. Perhaps Amazon could not make
as good of an offering but their marketshare was 15% 10 years ago and China is
a large, homogenous, and modernized population like the US which is perfect
for Amazon's scale strategy. It's a hard sell to say that a trillion-dollar
company does not have the resources and talent to do what the people in the
next building can.

~~~
tsukurimashou
As opposed to US companies that are certainly not helped in any way by the US
government

~~~
manigandham
Sure, but definitely not to that extent, competitors are certainly not
suppressed in the same way, and it's irrelevant to the discussion of why
Amazon left China.

~~~
lexs
Bombadier literally was ended by the US government

~~~
manigandham
Do you mean Bombardier? The aviation company with $16B in revenue and 65k
employees? Looks like there was a tariff imposed on one of their models due to
a complaint by Boeing but was overturned 4 months later in Jan 2018.

If this is the company you're talking about, can you describe what you mean by
"literally was ended"?

~~~
lexs
Without the Airbus deal for the C-Series Bombardier was basically in
bankruptcy exactly because of those tariffs. It felt like quite a targeted
attempt to, as you put it, suppress competitors.

~~~
brennebeck
Maybe so, but that’s quite different from “literally ended.”

------
product50
Amazon has literally won everywhere else in the world. But in China they were
slow at execution? Does this read right to you? Or maybe there is a regulatory
angle which no one is talking about because...China.

~~~
paganel
> Amazon has literally won everywhere else in the world

I've mentioned it in another comment, too, but Amazon is not present in my
Eastern European country (Romania), where Alibaba beats them by a large margin
(even though they're also not officially launched here). I've just done a
quick search and it seems Amazon is not winning it in Russia either, nor in
Ukraine, to say nothing of India. As such, to say that they are winning
"everywhere else in the world" is not really true, they're only winning in
North America and some Western European countries (too lazy to search what
really happens in South America or Africa).

~~~
bad_user
I’m a Romanian. What do you mean Alibaba is beating Amazon in România?

I’d say that’s hyperbole. Neither of them are present here and if I were to
guess judging by my own experience, I’d say that Amazon is still more popular.

Do you have hard numbers?

Of course neither of them hold a candle to the local eMag, but that’s only
natural.

~~~
paganel
It’s hard to get hard numbers on this but in my circle of acquaintances “you
can find it on Alibaba” and variations of this has become almost like a noun,
like “I’m going to make a Xerox (i.e. a photocopy) of this paper”. I’ve never
heard anything similar concerning Amazon. My acquaintances are mostly non/tech
people, 25 to 35 years of age, from Bucharest. Emag is of course a totally
different beast but I had chose to ignore it because it didn’t directly
concerned the article.

Slightly OT, I’m also curious how come no analyst is mentioning FB marketplace
as a competitor to Amazon.

------
PakG1
What's with these comments that Amazon couldn't win in China because they
didn't play well by Chinese rules? The article paints a pretty compelling
picture that the issue is that Amazon couldn't compete well with local
companies. If they were that bad at competing, they wouldn't need conflict
with the government to fail, failure would be a natural effect of being unable
to keep up with local competition.

~~~
yibg
Probably a combination of a few things: 1) Western audience of HN that have
only witnessed the dominance of Amazon so have a hard time imagining a better
competitor. 2) Ongoing negativity towards china in this area. Put the two
together, and China must be cheating for Amazon to not win.

I think most people underestimate how difficult it is to compete on local turf
(even without political handicaps). In fact it may very well be that Alibaba
and JD are in fact the better services and would be dominating in the west if
not for the same home turf advantage.

~~~
teknologist
More like home turf nuances.

China domestic shipping relies on very low paid workers working very long
hours. On top of that, Amazon have already established their delivery
infrastructure in a much more expensive environment. It would be tough for
JD/Taobao to break in at this point.

------
cletus
This is why I don't get why companies--tech giants in particular--kowtow to
China in the hopes of getting access to the Chinese market. It will never
happen. At least, it won't be open access. You'll have to play by Chinese
rules (ie integration with the Great Firewall, storing data in China, probably
integration with social credit and so on). Worse, there might be (basically
forced) "IP transfer". Even after all that, the government will make sure that
you don't dominate any market. There'll be a Chinese version for that.

There is absolutely zero point in trying to mollify the Chinese government.

~~~
sytelus
Perhaps you didn’t read the article. This has nothing to with government
interference. Local players in China are very strong with likes of Alibaba
doing massive shopping festivals that easily rivals Thanksgiving. Two day
delivery is China is considered slow and nothing to be proud about. On the top
of this, it looks there were control issues where leaders at Amazon.cn weren’t
empowered to make decisions. I actually would rather ask reverse question: why
Alibaba etc aren’t bigger in US or Europe given their far more aggressive take
on offering huge catelog at lower prices with ultrafast delivery.

~~~
philwelch
The entire Chinese economy has to do with government interference. The scales
are absolutely tipped in favor of Chinese companies.

~~~
49531
I wouldn't think that is a bad thing per se. Countries who can consume and
produce within themselves are going to succeed more than those who primarily
import / export. If I were the Chines government I'd want to keep Amazon out
as well.

~~~
giggles_giggles
>Countries who can consume and produce within themselves are going to succeed
more than those who primarily import / export

Citation heavily needed for that claim.

~~~
scarmig
Take the natural experiment of the Korean peninsula. Who would prefer to live
in the (relatively) free-trading, cosmopolitan hellhole of South Korea when
they could live in the utopian autarky of North Korea?

~~~
notfromhere
He wasn't arguing for autarky, but having an industrial base.

------
exabrial
It's hard to compete against government sponsored monopolies inside China.
There's also a huge nationalism sentiment brewing in China and distrust
growing for western companies and nationals from other countries.

It's sort of hard to wrap your head around these concepts as a westerner,
because we start form two different places of thinking; in China, the
government is your way of life, as long as it doesn't interfere with your
daily life. The constructs of intellectual property, property rights, etc
aren't present

~~~
dangus
It's hard to compete when you're not competitive.

Amazon still runs AWS in China with a Chinese partner. This is just Amazon.cn
being unable to compete with local alternatives like Taobao.

What you're saying isn't wrong but I don't think it's particularly relevant to
this situation.

~~~
exabrial
What about Uber and DiDi?

------
EnderMB
Purely as an outsider looking at the regular China tech posts with interest
over the years, it feels like there's a common thread, where US tech giants
look at the Chinese market and rub their hands with glee, expecting to simply
place an office there and integrate as they do everywhere else, only to find
an existing ecosystem they seemingly have no knowledge of - and instead of
studying that ecosystem and improving their product globally they bow out when
China doesn't seem to be as "easy" as first thought.

Obviously, this is a gross over-simplification of the situation, but it feels
weird that FAANG-size tech companies seem to all be making the same mistakes
by embedding their services into a packed marketplace and being arrogent
enough to expect to beat pre-existing competition. Outsiders may claim (and
rightfully so) that China has a bias towards Chinese companies, but this bias
doesn't seem to be the reson why the likes of Amazon and Google fail in China.

------
seemuch
I am so sad to see how the comments under this post manifest. People just
blindly pointing fingers to the big evil Chinese government for the failure,
without any evidence whatsoever. I get it, failures are hard. But you can face
it and learn to be responsible for it. All grownups do that. I think American
are transitioning from a bunch of doers to a bunch of whiners.

~~~
bleriot
Do you deny that the Chinese government makes it extremely difficult for US
companies to operate there?

~~~
SZJX
And that must be why Microsoft, Nike, Starbucks etc. failed so miserably,
right?

And could you explain how exactly the Chinese gov made things difficult for
Amazon?

Seriously this whole thread is just amazing, tragic and downright sad.

------
StopHammoTime
Amazon's model has been a "central place for everything". Culturally, China
seems to be more open to having ten million places to get their specific
things they need. Having a central online store is not a big deal for them.

~~~
OrgNet
Do they have the equivalent to a shopping mall that allows them to easily find
smaller online stores?

~~~
baybal2
That's how Taobao worked from day 1

------
yadaeno
In online retail, shipping speed and selection are what entice customers. I'd
argue that the UX and promotion landscape are moot past a certain point.

Fast shipping and selection comes down to infrastructure. China is spread out,
this means each FC must carry more stock on average, and you need more FCs per
person to reduce shipping time.

Markets like Japan and small EU countries are juicy targets for this reason
(which is why you see so much investment there).

And then there's 'regulatory challenges'

Each FC requires large amount land, development, and employees. These types of
projects require a high level of cooperation of the government to be worth the
investment.

This doesn't pair well with a government that is notoriously unwelcoming to
foreign business.

~~~
SZJX
This is at least a more reasonable take on the matter than those pointing
fingers at the big, evil Chinese government without any clue what they're
talking about.

------
nicodjimenez
They are quitting the B2C e-commerce market, not the B2B market. B2C is an
area where China is in many cases more advanced than the US, especially when
it comes to mobile apps. US is more web app centric and China is more mobile
app centric. China has really good apps like WeChat for which there doesn't
exist an equivalent in the US.

Also it does look like Amazon in general is putting more resources into it's
higher margin businesses (eg AWS and Echo) than e-commerce.

------
Sutanreyu
Should be obvious... Amazon has become a peddler of goods manufactured in
China, at inflated prices. Why would they pay more for the things they can get
cheaper locally?

------
eledumb
Amazon is being smart.

They know the Chinese will steal every bit of IP/Technology they can, and then
once they've extracted all the juice they'll create market conditions that
make it impossible for the foreign company to remain successful.

China has been running this program on everyone since they started with the
Communist/Open market concept. It's just amazing that companies still haven't
caught on. The lure of big money blinds the greedy.

~~~
ssnistfajen
Some people always have a myriad of excuses to cover up what appears to be
simply a failure to stay competitive in a highly competitive market.

Learn to read the article next time.

~~~
yhoneycomb
this guy has a clear anti-China bias

got into it with him on another post

------
manigandham
This has nothing to do with communications or product development. China will
not let a non-Chinese company ever gain top position in any sector. That's how
the government works. And yes the article is bullshit because this same
government won't allow any negative press about their actions either. These
Pandaily journalists will have a very hard time if they actually wrote about
the real environment there.

~~~
tekkk
While the evidence in this case seems to be against this statement (Amazon
indeed offered worse service than competitors) I think it is otherwise valid.
Chinese are really driven to become the world's superpower number 1 and give
no quarter to Western companies trying to establish themselves in China.

So the big dilemma is, do we let them? Or more precisely, do we as the outside
world let Chinese stifle all the foreign companies in their own market while
their own companies operate freely in those foreign countries? It smells
really a lot of mercantilism, and the Chinese culture of copy-catting freely
doesn't help. It seems like the Western countries in particular have become
too soft for Chinese tactics, and are too afraid to act against China. This at
least has been my perception.

~~~
mahranch
> Chinese culture of copy-catting freely doesn't help.

The problem with that, is that it's a vicious circle. Innovation is the
foundation for future innovations. It builds on itself. It lays the groundwork
and foundation for what comes next. By leapfrogging and cheating its way to
the top (or near the top) they are sacrificing that crucial infrastructure for
future discoveries and innovations.

China _has_ to copy & steal IPs because it simply doesn't have the culture to
compete. They're one of the least innovative countries on Earth, year after
year. And the only way to change that is by allowing its citizens to think
creatively, outside the box -- to be able to challenge authority. But China
doesn't want that; they want conforming little worker bees who follow the
party line.

~~~
yding
This is just wrong. By many measures, China is one of the most innovative
countries on earth. Take scientific citations for example:
[https://www.natureindex.com/news-blog/chinas-citations-
catch...](https://www.natureindex.com/news-blog/chinas-citations-catching-up)

~~~
mellow-lake-day
How much of those are legitimate though? There have been cases of fraud and
falsifying information.

"Since 2012, the country has retracted more scientific papers because of faked
peer reviews than all other countries and territories put together,..."

[https://www.nytimes.com/2017/10/13/world/asia/china-
science-...](https://www.nytimes.com/2017/10/13/world/asia/china-science-
fraud-scandals.html)

~~~
Leary
Given that the Nature Index only measures top quality publications, China's
contribution to science is second only to the US's.

[https://www.natureindex.com/annual-
tables/2018/country/all](https://www.natureindex.com/annual-
tables/2018/country/all)

------
tanilama
Amazon is out of China not because of CCP but capitalism. If you ever bought
stuff from Amazon.cn you would know what I am talking about.

------
atomical
> Liu also bought items on Amazon.cn only to find disappointment, as it took
> him two days to receive them. “How could they call that two-day delivery,”
> Liu said.

What is he saying?

~~~
echan00
I was just about to re-quote this. If you have lived in China before you would
understand and agree that two days (the Amazon Prime gold standard) is
considered too slow in China.

~~~
cromwellian
But if you're lived in China and used JD or other delivery companies, you have
to agree that the delivery fee is insanely cheap for same-day delivery, and
that this gig work seems on borrowed time, the costs are going to increase,
and the question is, will JD be able to keep this up?

Amazon is using proven multi-decade logistics companies for delivery, so it's
pretty certain their internal cost structures are rational.

How much are the JD trucks and delivery guys being paid? How above board is
JD's finances? What are they getting from the governments? Perhaps it's just
another WebVAN.

These things are never quite clear in China, transparency and public audits
are not present.

~~~
baybal2
Alibaba outsourced logistics to a big extend. There is their own Cainiao, but
it is just a franchise front for small delivery companies.

They pay market rate, and that's nothing unreal when most Chinese live in
densely built up apartment blocks (a big difference from USA)

~~~
cromwellian
The density only partially helps, because there is still an overhead in even a
single delivery that has to be paid. I'll give you an example, 饿了吗 will
deliver food for 5-10 RMBdelivery fee in Shanghai. I would often order say,
生煎包 for 8 RMB and pay 5RMB delivery. A guy on a delivery bike would take like
15-30 minutes to deliver, and I often noticed they only delivered one order in
my condo (his bike had nothing else in the basket), and just getting from the
street to my condo's door, ringing the phone, and having me buzz him up the
elevator would consume 5-10 minutes of his time getting in/out of the place
and back to his next delivery.

Shanghai minimum wage is 2500 RMB/mo. So in order to make minimum wage, this
guy would need to make 500 orders in 30 days, or 16 deliveries per day. In an
8 hour day, could he pick up and make 16 deliveries? Sure, but it's tight, and
obviously at some point, they have to pay the delivery guys more.

And they have, but in order for O2O players to pay more to the delivery
people, they've ended up charging more to the restaurants, and so the
restaurants have then ended up raising the prices on the menus displayed.

So this indicates that the current O2O system in China wasn't stable. Despite
massive revenues, the heavy competition, discounts, and artificially low
introductory fees, and ease of switching, doesn't give me confidence their
current structure will work.

And 饿了吗‘s logistics seem pretty chaotic to me and no different than Postmates
or Doordash in the US. I rarely saw delivery bikes loaded down with multiple
orders, because 15-30 minute delivery windows pretty much dictate a point-to-
point delivery, rather than a hub and spokes model.

~~~
baybal2
The lunch delivery market is not what I meant, but more conventional
ecommerce. I know for sure that in that market, companies do make break even.

In Russia, we had same day delivery even in very first eCommerce site back in
nineties, and even e-groceries. That was just much a much smaller market, and
the fact that 90% of country's economy was in Moscow back then was helping.

China today is not much different with 5 megacities making 90% of eCommerce
trade volume.

Are stationed in China?

~~~
cromwellian
Not currently, but I've lived there long enough to partake in its
O2O/e-commerce/wechat lifestyle :)

------
coldcode
Another non-Chinese giant being driven out of the Chinese market by Chinese
leadership. Of course its their country and their rules.

~~~
mtgx
It doesn't prevent American companies from handing over all of their tech IP
to China (the one that wasn't already stolen) and attempt to do their bidding
at every step.

So it's win-win for China -- there's another (American firm) sucker born every
minute looking to "enter the huge Chinese market", and the Chinese gov is
taking full advantage of that (ultimately) hopeless dream.

~~~
NicoJuicy
It seems to be previous generation tech though

~~~
meddlepal
Which is still a better starting point than nothing.

On one hand it sucks that China is abusing its position in the global market,
but on the other hand I am really not shedding any tears for greedy corporate
America getting screwed for once.

~~~
javajosh
Sadly, it's not just greedy "corpo 'merka" getting screwed. Plenty of scrappy
software startups with stars in their eyes have services and products that
would really improve Chinese lives, but can't or won't operate in-country
because it is entirely too much risk.

~~~
xj9
my impression is that this is exactly what China wants. what do they have to
gain from allowing american companies into their market without some hurdles?
it is far more beneficial to china to encourage local business development.

