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China’s Great Wall: The Failure Of Amazon?

 4 min read / 

China is the world’s most populous country with more than 1.3 billion people. In recent times, China has seen high economic growth and has maintained its position as the world’s manufacturing powerhouse.

Consequently, Western tech giants have targeted China for its growing middle-class population with rising incomes. However, companies with a strong global foothold, such as Amazon, have been unable to expand into China. How is China different than other markets? Why have traditional business models failed in China? Global companies are in the quest for answers.

The New Market

China opened up its borders to international businesses in the 1970s and US companies since then have tried, failed and in some unique cases been able to withstand the trials of the Chinese market. Common household names such as Google, eBay and Home Depot are all companies which have failed to conquer the Chinese market even though they were successful in other countries.

One of the main limitations in China is the inability of businesses to adapt their strategies. Companies’ “one-size fits all” business models are inflexible and unable to take into account Chinese preferences and tastes. The other constraint is the usual strong local competitor.

As local companies are usually built on Chinese consumer preferences, foreign companies are unable to compete with them, as seen in the case of Amazon. Chinese consumers also prefer products from native companies over those from abroad. Additionally, the government provides incentives to domestic firms, which makes disrupting the local market extremely difficult.

The Structure

Amazon has been present in China for ten years, but only controls a meagre share of 2% of the country’s rapidly booming e-commerce market. The first strategic move by Amazon to acquire, the largest online bookstore in China, in 2004, did not seem to reap any rewards for the company. Being stricken by privacy issues and the lack of local knowledge, Amazon was deemed more expensive than the market leader, Alibaba.

80% is Alibaba’s market share in China

Alibaba controls a staggering 80% market share in a price-sensitive Chinese market. Amazon and Alibaba operate different business models. Alibaba runs its well-known Tmall platform which acts as a web-based shopping centre.

In contrast, Amazon’s business model has been the one it holds worldwide. Amazon is an established online store operator that purchases goods and services from various suppliers in bulk and sells them directly to customers via its online site.

Amazon’s existing strategy of operating as an independent online store was not successful in China as Alibaba’s market dominance deterred any new players in this consumer space. Hence, Amazon decided to open a store on Alibaba’s Tmall platform as a way to gain more exposure to the mass market and the huge clientele of shoppers. However, Amazon’s existence in the Chinese market is still in doubt as Tmall is a very saturated platform with thousands of retailers and the biggest brand names.


Amazon’s move to buy Twitch last year for $970m is part of the company’s extensive strategy to diversify and leverage the popularity of e-sports which has 134 million viewers and a market worth $612m. Specifically, Asia includes the largest population of gamers and e-sports fanatics. Moreover, Asia houses the world’s top players in this field and with Twitch being the world’s leading platform for watching e-sports, it seemed like the appropriate purchase for Amazon to attract such players and viewers alike.

$970m was the price paid by Amazon
for Twitch

However, this move was also contested by businessman Wang Sicong, who announced that he will be launching Panda TV, a Chinese e-sports streaming platform that will compete directly with Twitch.

Wang Sicong’s popularity in China is second to none. As the son of China’s richest man, he has been a successful entrepreneur, and he is also a gamer himself. Equipped with boundless resources and knowledge of the local Chinese gaming culture, Wang Sicong has positioned himself in an advantageous position to take on Twitch.

Looking Ahead

China’s regulated market environment has censored and deterred foreign companies from entering for decades. This, in addition to the constraints mentioned above, does make it a hard case for Amazon’s survival in the Chinese market in the long run.

Amazon does have a global foothold and backing of optimistic shareholders. Only time will tell whether it can make a comeback and a substantial impression on China.

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