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You would be forgiven for not knowing Amazon has been operating in China for more than ten years, but maybe longer. The company would be in discussion to merge its China-based import business with its local counterpart Kaola, the cross-border buying platform run by the Chinese internet giant, NetEase, Caijing reported (link in Chinese) on Tuesday.
The transaction, which NetEase initiated and will be through an exchange of shares, was signed in late 2018 but negotiations were difficult, sources said in Caijing.
The timing of the wedding is interesting because Amazon has recently signed an agreement with Western Union to better serve uncooked buyers across Asia (which did not include mainland China). Amazon also connects Chinese sellers to consumers around the world, and just last week, WorldFirst, a London-based payment company that relies heavily on its relationships with small and medium-sized Amazon merchants, bought himself by Alibaba, a direct rival to Amazon.
According to Caijing, the NetEase merger will not affect Amazon's export unit.
NetEase Kaola declined to comment on the case. Amazon China can not be reached immediately for comment.
Amazon entered China in 2004 after buying $ 75 million from the local Joyo book company. In 2014, it began offering a shopping service abroad to capture the growing appetite of Chinese consumers for imported products. Since then, the titan has designed various marketing gadgets – including its annual Black Friday campaign – to attract buyers, but the company has never managed to establish a dominant position in China, dominated by big guns like Alibaba and JD. .com.
According to the research firm iResearch, Amazon held less than 1% of the Chinese trade market in 2016. In the import arena, Amazon China held about 6% in the second quarter of 2018, while Tmall Global, from Alibaba, took the lead at 29%. , by data from the research firm Analysys. NetEase Kaola and JD.com followed with 22.6% and 13.7%, respectively.
Despite its weak presence in China, Amazon's massive global reach could be a coveted asset for its local rivals. "Netease needs to get more inventory and it's difficult because they do not do marketing as well as Alibaba overseas," said Ivy Shen, vice president of Azoya's cross-border e-commerce startup based in Shenzhen, at TechCrunch.
"Kaola is also opening more stores offline, which may require more capital, and Amazon can provide this capital. The cross-border market is not big enough for Amazon, but offline retail could be, "Shen added.
NetEase is best known as the second largest video game publisher in China after Tencent, but its success dates back to the personal computer era, where it ran a popular news portal and messaging service. The Hangzhou-based company has reinvented itself over the years, jumping into a wide range of businesses, including streaming music, a segment that competes with Tencent's QQ Music; the comic strip, which she sold to Bilibili, an animated streaming company supported by Tencent and Alibaba; and eCommerce, a unit that has recently driven the bulk of its growth and generated approximately 27% of its overall business in the last quarter.
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