AMAZON IN EMERGING MARKETS 1
Amazon in Emerging Markets
Amazon’s Performance in China and Major Learnings
With due attention to disappointing results and various obstacles that Amazon faced in
China, we can not consider Amazon’s presence in China as a success. I believe one main reason
leading to this failure is Amazon’s procrastination to expand its business in China. As stated in
Amazon’s case, when eBay acquired EachNet in 2003, the Chinese market experienced intense
competition between Alibaba, eBay-EachNet, and Jingdong Mall. In order to increase their
market share, these companies absorbed a lot of attention by heavily investing in their online
forums and advertisements. Therefore, entry into the Chinese e-commerce market became very
risky for new players. Amazon entered China in 2004 by acquiring Joyo.com, an online book
retailer, and operated under this domain until 2007 when Amazon increased its offerings. I
believe Amazon lost a great deal of time by only watching the competition among other
companies who became giants out of their aggressive investments. In my view, Amazon should
have aggressively entered the rivalry in 2002, when the existing companies were rapidly
growing, by offering various offerings instead of only focusing on books.
Another significant factor in Amazon’s failure is related to limited knowledge about
Chinese business culture and the use of its western model of business. In fact, Amazon assumed
that consumers all around the world want the same things. Since Amazon adopted the same
model in China as in different countries by offering books as the entry strategy, it didn’t consider
that in China, foreign companies are seriously restricted to publish the books. Therefore, the
company only had the opportunity to distribute e-books rather than owning the content, and this
negatively impacted the company’s revenues. In addition, Amazon used the same distribution
and pricing strategy in China as in western countries and did not consider that Chinese players
Change Management Models 2
have faster delivery options, and manufacturers take direct orders from the customers, offering
very lower prices (Lei, 2013).
With due attention that most of the high-quality books offered by Amazon are in English,
the company lagged behind the competitors who were offering books in Mandarin as the official
language in China. Also, in China, Amazon’s website was operated by a Chinese company, and
this removed the Amazon’s chance to maneuver on its website based on Chinese consumer
preferences (Lei, 2013).
The major point that Amazon learned in China is that entering each country requires to
provide different competitive advantages based on the consumers’ preferences and the country’s
rules and regulations. Amazon learned that it needs to adjust its operations and adapt to fierce
