Discuss TWO reasons for Amazon’s retreat from the Chinese market.
Read the following information and address the relevant requirements. The World of International Management: Global Online Retail: Amazon v. Alibaba This vignette explores online commerce and, in particular, the strategy and success of Amazon.com. Online retail sales in the United States will reach $1 trillion by 2025. The Chinese retail conglomerate, Alibaba Group, had online sales in 2018 totaling more than triple that of Amazon. Alibaba’s Tmall (Amazon’s competitor) is expected to become the largest individual ecommerce site within the decade, surpassing Amazon in total revenue. Alibaba combines business-to-business, business-to-consumer, and consumer-to-consumer transactions under a single ownership umbrella, while Amazon specializes primarily in just business-to-consumer sales. Amazon entered the Chinese market in 2004 by acquiring Joyo.com, a popular online seller of books for $75m – during the next decade it became Amazon China and peaked at a B2C market share of 15.4% in 2008. However, in 2019, Amazon announced the decision to close its domestic e-commerce marketplace business in China, effective from July 18 that year. The company would keep running other business sections in China, including Amazon Web Services, Kindle e-books, and cross-border operations. The exit marked an end of the company’s 15 years of journey into the China market for their rigid localization in business strategy and management. Amazon’s withdrawal from the Chinese e-commerce marketplace is also in big contrast to Alibaba’s success. In the report, you are required to:
1. Discuss TWO reasons for Amazon’s retreat from the Chinese market.
2. Make TWO recommendations on how Amazon could increase its market share in China.
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