Can Amazon.com succeed in China when other big-name western internet brands have so far failed?
Jeff Bezos, Amazon's boss, clearly thinks so and he was in China this week to boost interest — and investment — in Amazon's loss-making Chinese venture, now called Joyo Amazon.cn.
Bezos said China is the company's fastest-growing market but it is one where Amazon has, atypically, lagged behind the home-grown competition, most notably Dangdang, which enjoys better name recognition among Chinese internet users and higher market share — 28% versus 12% according to this BusinessWeek story.
On his first official visit to China since Amazon bought Chinese internet company Joyo.com three years ago, Bezos yesterday unveiled the new brand for the Chinese site, as well as other features designed to attract more Chinese customers. He said Amazon intends to pour more capital into expanding its China operations, but declined to specify any amounts.
EngagingChina is a great fan of Amazon and its tried-and-tested business model has now been rolled out in six national markets — Canada, the UK, France, Germany,Japan and, of course, the US.
Amazon certainly has deep enough pockets to crank up investment in the Chinese operation even if it means sustaining greater losses. And its softly-softly approach to engaging with China has meant it has so far avoided making the sort of strategic blunders made by Yahoo! and Google – see this story for more.
But a large chunk of Amazon's revenues in the west comes from selling DVD and CDs, and these are the products that most suffer from piracy in China. So, it is difficult to see how Amazon.cn hopes to achieve the same “category killer” status in China's online retailing scene that it enjoys in the US.