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Amazon concedes in China e-commerce battle

Amazon will close its domestic marketplace in China in July, ending a rough 15-year battle against Alibaba, JD.com and other up-and-comers in what is soon to become the world’s biggest e-commerce market.

The company will keep running other business sections in China, including Amazon Web Services, Kindle e-books, and cross-border operations.

“We are notifying sellers we will no longer operate a marketplace on Amazon.cn and we will no longer be providing seller services on Amazon.cn effective July 18,” the US company said in a statement.

A slackening China economy hasn’t helped and local incumbents, Alibaba and JD.com have also seen year-over-year declines in recent quarters as the economy slowed. For a market underdog like Amazon China, the situation is even more severe.

The closure is not likely to impact Amazon to a major extent as China isn’t one of Amazon’s top markets – currently the US, Germany, the UK, and Japan reign supreme. So shuttering Amazon China’s domestic marketplace shouldn’t hurt its long-term growth.

Meanwhile, the pull-out from China didn’t shock many as the limited choice of brands and slow delivery (even with Prime membership) was a major problem, particularly in comparison to the efficient delivery of China-based e-commerce services, like Aliababa and JD.com

Amazon’s development in China has been slow after its acquisition of Joyo.com, a Chinese online shopping website in 2004 and many analysts say the company was slow to adjust to the rapidly changing China market.

The retreat is indicative of the relentless e-commerce race in China where Alibaba and JD.com dominate, and newcomers like Pinduoduo are rapidly closing in on the dominant players.

The move does hold some surprise however, as Chinese consumers have developed a large craving for imported goods as middle-class consumers now demand higher-quality products, something Amazon was able to fulfill.

“Over the past few years, we have been evolving our China online retail business to increasingly emphasize cross-border sales, and in return we’ve seen very strong response from Chinese customers,” Amazon says in a statement.

“Their demand for high-quality, authentic goods from around the world continues to grow rapidly, and given our global presence, Amazon is well-positioned to serve them,” the company adds.

“Amazon’s commitment to China remains strong – we have built a solid foundation here in a number of successful businesses and we will continue to invest and grow in China across Amazon Global Store, Global Selling, AWS, Kindle devices and content.”

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