3. Discuss the possible challenges Amazon could face in China going forward. What should it do in such a scenario? “China is a very important market for Amazon. We’re committed to growing our business here.”

“The demand for international brands is rising rapidly, thanks to cross-border online shopping, which is probably one of the fastest rising trends in e-commerce.”2

—Elaine Chang, Vice-President of Amazon and President of Amazon China, in 2017

“Amazon is a prime example of a company which thought it could succeed in an entirely different market just by continuing to do business as usual [. . .], This method of going about globalizing a product will almost never result in good success and analysts are actually calling for Amazon to pull out of China.”3

—Clayton Jacobs, an Entrepreneur-in-Residence with and the Head of Cross-Cultural Design, at ReadWrite, in 2017 Amazon.com, Inc. (Amazon) entered China in 2004, taking over Joyo.com4 (Joyo) for US$75 million. But as of mid-2018, Amazon held less than a 1% e-commerce market share in China, according to research firm eMarketer.5 Analysts pointed out that despite its global growth, Amazon had not been able to make a mark in China. Amazon was facing stiff competition from local companies such as Jingdong Mall6 (JD), Tencent Holdings Limited7 (Tencent), Taobao Mall87 (Tmall) owned by Alibaba Group Holding Limited9 (Alibaba), etc., despite the scorching growth of e-commerce in China.

Apart from stiff local competition, factors such as censorship by Chinese regulators over the internet, restrictions on foreign investment, and counterfeit sellers, were posing big challenges for the company in China. Analysts were left wondering whether Amazon had localized its innovations enough to appeal to the Chinese consumers and whether Amazon had really understood the Chinese-commerce market. While speculations were on about Amazon merging a certain portion of its overseas purchase business with Kaola10 in 2019, Elaine Chang (Elaine), VP of Amazon and Amazon China president, had the big responsibility of streamlining Amazon’s operations in the country and overcoming the challenges.