
Amazon opens a store on Alibaba - raus22
http://qz.com/357452/amazon-throws-in-the-towel-and-opens-a-store-on-alibaba/
======
SwellJoe
Every once in a while, I'm reminded of what a tenuous position the United
States economy and its businesses are in, in terms of the world market. The US
is in relative decline in influence, while China is rising in influence and
wealth. American exceptionalism is going to become less and less viable as a
governing philosophy in the coming years. This is one of those instances where
I'm reminded.

Also, I need to learn start learning Mandarin, like today. The opportunities
missed in the tech industry by not knowing it are going to be _huge_ in the
coming years. I set for myself a goal of learning one new language a year this
year, starting with Spanish (and I'm doing pretty good on that goal). But, I'm
tempted to try to learn both simultaneously. Just not sure where I'll find the
time. Spanish study already gets a lot of my leisure time. Maybe I need to do
less facebook, reddit, and HN.

~~~
adventured
The United States is rising in fact.

Over the last seven years, during which Europe's GDP has been stuck at or
below 2007 levels, the US has added $3.5 or so trillion to its GDP, and is
presently adding ~$550 billion per year to its GDP. Its unemployment rate
continues to fall, in very real terms (not just on the U3). Wages are rising
nicely, finally. The US is now fully capable of supplying 100% of its own
energy needs, in fact the US has one million barrels of oil per day too much,
the US is now drowning in too much oil supply. The US also will retain the
global reserve currency for decades to come, making it possible to easily
finance its debts. The US has a healthy demographic base, unlike much of
Europe, China and Japan.

At a time when many other nation's households are accumulating tons of debt,
the US has returned its household debt to income ratio back to about 100%, or
close to where it was 10 and 15 years ago. Contrast that to, say, Denmark
(260%), Sweden (150%), the Netherlands (250%+), Norway (180%), or Canada:

[http://i.imgur.com/jujosgO.png](http://i.imgur.com/jujosgO.png)

Since 2008, China has become the world's most indebted nation, taking on at
least $30 to $35 trillion in new debt (some analysts put the number at closer
to $45 trillion). In the next five or six years, China will add another $25 to
$30 trillion in debt. Their sovereign wealth fund pales in size to the extreme
debt they've accumulated, among both consumers, corporations and their shadow
economy. They're accelerating into a disaster of epic proportions, all in the
name of faking growth (real growth is zero at this point, if they're lucky);
their growth boom came to a crashing stop during the great recession, so they
shifted to accumulating vast debt to keep it going, with ever lessening
returns on that debt. China is replicating the mistakes Japan made when their
growth engine ceased, but doing so over an extremely compressed time-line.

Simultaneously China has upwards of 600 million unemployed people that are
presently pretending to be farmers, held in place by intentionally backwards
government farming policies because there are no jobs for those people.

China also has no social safety net of meaningful scope, at a time when
they're already in the late desperate stages of debt accumulation.

China has a demographics disaster that is already underway. The repeated line
that they will get old before they get rich, is indeed the case.
Simultaneously we're entering the era of robotics, which will wipe out tens of
millions of low quality manual labor jobs in China.

China's real estate bubble has already popped and is deflating.

Bottom line, the US is in vastly better shape than China.

~~~
SwellJoe
Thanks for posting all of this. It's really interesting and useful.

However, I think you're overly optimistic about some elements of the US
economy. Oil? Much of our oil surplus is in tar sands/shale oil, which is the
most expensive oil in existence to extract, and it only became profitable to
extract during a brief window when the price of oil climbed into the
stratosphere. Now that the OPEC nations have flooded the market, several of
those oil producers have had to shut down their fracking operations (which is
a blessing for the rest of us, given the ecological disaster that fracking
represents), or are facing the possibility of economic disaster...huge sums
have been invested in something that can only pay off if oil prices quadruple
in the near future. Energy in the US is in an extremely precarious position,
and there seems to be little motivation to correct course toward renewable
sources.

China, on the other hand, while still mired in a fossil-fuel based economy
like most of the rest of the world, and suffering extreme pollution in many of
its large cities, has invested heavily in renewable energy, and Chinese
manufacturers produce 63% of the world's photovoltaic cells.
[https://en.wikipedia.org/wiki/Renewable_energy_in_China](https://en.wikipedia.org/wiki/Renewable_energy_in_China)

I don't know enough to discuss the issue of debt (though the US is not exactly
debt free, both on a national level and an individual level; our student loan
problem is pretty much guaranteed to destroy an entire generation of wealth,
and almost no one is talking about it). And, I agree with you that China is
not a nice place to live or work for most of its people. I'm certainly not
suggesting I'd rather live in China than the US.

 _" Bottom line, the US is in vastly better shape than China."_

Today. We're certainly agreed on that. I don't know that I believe today is a
strong predictor of ten, twenty, and fifty years from now. While it's true
that national debt is dangerous and China is in many ways a backward nation,
it's also true that China is home to many of the world's best
technologists...we don't know their names, we don't know their work on an
individual level. But, they're helping design the computers, phones, etc. that
we're using, and they're writing much of the software for them.

The history of Silicon Valley has shown that a handful of very bright people
with a lot of resources can change the world. China has a lot more than a
handful of bright people and the manufacturing sector has vast resources. I
believe we're only beginning to see what they can do.

 _" Simultaneously we're entering the era of robotics, which will wipe out
tens of millions of low quality manual labor jobs in China."_

This is an interesting discussion to have, _particularly_ in the comparison of
the US to China. Low cost manual labor left the United States to go to China
beginning roughly around the time I was a kid. The US suffered through
stagflation, and a variety of ups and downs, and some would argue the US is
_still_ recovering from loss of those jobs (real wage growth at the low end of
the market has almost been flat for decades). If the US is healthy now, it is
because it recovered from loss of those low-skill manufacturing jobs. It is US
exceptionalism to assume that China cannot recover from the loss of those
jobs. It may take decades (and that'll suck for Chinese people, because things
are already pretty sucky for the poor in China), but it doesn't negate my
argument that China has a hand in building nearly every element of our future.

In short, I think we're kinda coming at this from different angles. I'm not
really arguing against most of what you say; and in fact, I completely agree
with most of it. But, I think my point was maybe missed: I'm not saying China
is a better place to live than the US. Merely that it's importance in the
world economy going forward is almost impossible to overestimate.

Also, the US is failing to deliver STEM field graduates at the rate needed to
grow our knowledge-based economy. This is a different discussion to have, but
the anti-science, anti-reason, sentiment among our governing elite virtually
guarantees long-term decline into stagnation.

~~~
adventured
The US energy position is the strongest in the world, and most diversified.
The US is the world's #2 solar energy producer / market behind Germany (who
cares who makes the cells? that's a low value commodity business racing to the
bottom), and the US is among the top four majors when it comes to solar in
most every respect (with Japan, China, Germany); the US has a vast supply of
coal; the US is soon to become the world's largest oil producer; the US is the
world's largest nuclear energy producer; the US is the world's #2 wind energy
producer (18% of all global wind energy, with about 22% of global GDP, not
bad).

The US is also a leader in solar technology, including the world's fiscally
strongest stand-alone solar company, First Solar. SunPower and First Solar are
also among the five largest in sales.

The US is arguably still the leader in nuclear technology, certainly among the
top three. It's very likely that over the coming decades the US will deploy
increasing amounts of new nuclear reactors.

Oil production is still climbing, not declining, despite the drop in oil
prices. That will continue until almost all foreign oil is pushed out of the
US market. Oil prices will also not stay low permanently, and meanwhile
fracking / shale technology will only get cheaper and more efficient. The US
is sitting on a 100 year boom in oil production, $50 oil is not going to even
remotely stop that. Consider the recently boosted Spraberry/Wolfcamp oil
field, now considered to be the world's second largest oil field at 75 billion
barrels (behind Ghawar) - and it has hardly been touched. Not to mention the
vast reserves off the coast of the US, which haven't been updated in ~40
years, and are likely many times larger than anticipated. The US position when
it comes to oil, is even better than presently estimated.

Now consider how most of Europe and China are heavily dependent on outside
sources of energy (oil, coal, natural gas). Europe is at Russia's mercy when
it comes to energy, not a good place to be. Japan also struggles with energy
independence, for now due to the plant shutdowns their nuclear energy supply
is a mere 1.7% of their energy, and they don't even make the list when it
comes to wind energy.

~~~
eru
Europe (especially Poland) has lots of shale oil and gas. They just don't have
the regulation to get it out. (Because of geology the technology needed is
also a bit different than in the US, so needs some investment.)

------
GigabyteCoin
According to Alexa, Amazon.cn is the 69th most visited website in the entire
world and the 14th most popular in China. [0]

Their second largest competitor JD.com (according to that article) is only the
16th most popular in China. [1]

Tmall.com is 5th in China, so OK Amazon.cn isn't THE most popular ecommerce
site in China. [2] But is that really failing and throwing in the towel?

What am I missing here? How has Amazon.cn failed in the Chinese market?

[0]
[http://www.alexa.com/siteinfo/amazon.cn](http://www.alexa.com/siteinfo/amazon.cn)

[1]
[http://www.alexa.com/siteinfo/jd.com](http://www.alexa.com/siteinfo/jd.com)

[2]
[http://www.alexa.com/siteinfo/tmall.com](http://www.alexa.com/siteinfo/tmall.com)

~~~
chimeracoder
> What am I missing here? How has Amazon.cn failed in the Chinese market?

Most popular US services/companies have Chinese-based (and Chinese-targeted)
equivalents[0], and in most cases, the Chinese version is more successful in
China than its US-based counterpart.

So the real question is: why do Chinese companies tend to outperform foreign
ones in China?

I have a number of speculations as to why, but I'm not sure if the answer is
really cut-and-dry[1].

[0] Some of these even predate the US version!

[1] Though the inability to (or difficulty with?) store Chinese user data
outside China is probably a big part of it

~~~
seanmcdirmid
> So the real question is: why do Chinese companies tend to outperform foreign
> ones in China?

Isn't that obvious? Foreign companies are limited or just entirely prevented
from doing business in China. China is basically a closed market: you can
maybe play if you follow some strict rules your competitors can ignore, but
rule #1 is that a foreign company can't in any way lead.

Look at the countries around China and things are quite different. Chinese
internet companies in general do very poorly outside of China, even in
adjacent countries or even open Chinese territories.

------
adventured
China is an extraordinarily difficult market to crack for outsiders. It's
dominated by domestic companies across nearly every product category /
industry.

For Amazon I actually think this move makes sense. If you can't beat 'em, join
'em. There's no reason Amazon can't build a ~$40 billion per year type
business riding on another platform in the massive China market (say over the
next decade). Alibaba makes all of its money from advertising, and essentially
zip from product sales. Amazon makes almost all of its money from product
sales, and almost zip from advertising - Tmall is a great way for Amazon to
drive sales via riding Alibaba's platform.

------
wldcordeiro
Does Alibaba have a store (or equivalent) on Amazon? It seems like a good
tactic to capture customers.

------
flatfilefan
Does anyone knows how is the warehousing/delivery done in that case? Is Amazon
using the Alibaba capacity there or it has still to do it itself in China?

~~~
est
warehousing/delivery is done by amazon. Only the transactions are done on
alibaba (Tmall) platform

------
logunath
China is good to have if you know the rules to play.

