Question 1 Read the case study below and answer the following questions: Amazon sets up warehouse in eastern China for faster overseas ecommerce, signalling confidence in consumer spending US ecommerce giant Amazon.com plans to set up a bonded warehouse in Ningbo, a major shipping hub in eastern China's Zhejiang province, to expedite deliveries of foreign goods, showing confidence in Chinese consumer spending in an otherwise weakening economy. The forward bonded warehouse, a first for Amazon's Global Store business, is expected to open in 2023 to help Chinese consumers buy from its UK and Germany platforms, the company announced over the weekend at the China International Import Expo in Shanghai, an annual event promoted by the Chinese government to woo investors. The warehouse, to be regulated by local customs, will allow overseas merchants to ship their goods to Ningbo, where they can be stored in advance. The new facility is expected to cut delivery times for Amazon shoppers by four to five days, the company said in a statement. In the future, the warehouse will also be able to service goods from Amazon's US and Japan sites, with expanded product categories to include pet food, the company added. Amazon did not reveal the cost of the warehouse. With the new move, Amazon is looking to "merge the advantages of bonded online shopping and cross-border e-commerce ... to optimise the experience of overseas shopping", Li Yanchuan, head of Amazon China Global Store and Prime, said in a statement. Amazon's announcement comes after an explosion in cross-border e-commerce, lifted in part by the pandemic, which kept many shoppers at home. In China, cross-border e-commerce grew tenfold in the past five years, according to customs data. Imports and exports together grew 18.6% last year to 1.92 trillion yuan (US $267 billion), of which imports accounted for 27.6%. China's retail e-commerce of foreign goods reached 117 billion yuan in the second quarter this year, down 10 per cent compared with the same period last year, but 19 per cent higher than the first quarter despite a weak macro environment, according to data from Analysis. The market was led by Tmall Global, operated by Chinese e-commerce giant Alibaba Group Holding with a 38.1 per cent share in the second quarter, while Amazon Global Store ranked fifth with 2.8 per cent. Alibaba owns the South China Morning Post. Amazon shut down its Chinese marketplace in 2019 amid fierce competition, but it refocused its effort on overseas goods. Through Amazon Global Store, Chinese shoppers could continue to buy goods from foreign merchants on some of the platform's other regional sites. At the same time, the company has grown the number of Chinese merchants selling through its global platform to reach foreign customers. The number of such merchants who registered on the Amazon Brand Registry increased 40 -fold in the last four years, according to company data. However, the so-called "made in China, sold on Amazon" community has suffered since a crackdown on fake reviews and other abuses. Last year, Amazon shut down 3,000 merchant accounts backed by about 600 Chinese brands. Despite the seemingly tougher stance on Chinese sellers, Amazon has sought to further boost cross-border e-commerce. In August, it joined forces with authorities in the eastern province of Hangzhou to encourage more Chinese merchants to sell overseas on the platform. A series of new support measures include year-long cross-border ecommerce training, subsidies for trademark registration, and government marketing campaigns. (a) Evaluate Amazon's planed bonded warehouse in Ningbo to boost its business. [25 marks] (b) Explain the challenges Amazon faced from China. [15 marks] 4 (c) Suggest TWO (2) warehouse operation strategies for Amazon in Ningbo. [10 marks]