Amazon's rivalry in China heats up

Posted by: Bruce Einhorn on June 6, 2007

Jeff Bezos was in China the other day to tout the growth of Amazon’s Chinese subsidiary, Joyo.com, which the Americans purchased in 2004. According to this report from Bloomberg, Bezos is happy with the progress that Joyo (now renamed Joyo Amazon.cn) is making. It’s still not profitable, but of course Amazon itself took years before it finally started making money, and Bezos says that Amazon is ready to put more money into the Chinese business. As Bloomberg reports: “ ‘With something growing this fast and doing this well, as far as investment goes, we would like to double down,’ Bezos said. `Double down is a term used in backgammon, which means when you like the odds, you want to increase the investment.’”

Helpful backgammon hints aside, Bezos and his team still have a way to go in winning over Chinese consumers. Peggy Yu, the co-president of Joyo’s archrival Dangdang.com, emailed me today complaining about what she calls Joyo’s claims to be the leading Chinese online bookstore. Not so, says Yu, who cites all sorts of stats from market researchers like Neilsen and Analysys International showing that Dangdang enjoys better name recognition among Chinese Internet users and has better market share than Joyo (28% versus 12%). Yu’s angry that news reports, such as this one from Sina (in Chinese) nonetheless refer to the Amazon subsidiary as tops in online Chinese bookselling. “We will see if Bezos’ s trip to China will kick off Joyo’s honesty journey,” Yu writes in her email. “Granted Joyo is an infant in Amazon family, but just as Deng Xiaoping said about education, things should be started with childhood.”

Not the most famous of Deng quotes, for sure, but the bigger point here is that Amazon is one of several big-name American internet companies trying to knock off local leaders in the Chinese market. So far eBay has tried and failed to knock off Chinese rival Taobao, Yahoo has tried and failed to overcome Chinese portals Sina and Sohu, and Google has tried and failed to close the gap with Chinese search champ Baidu. Can Amazon be the exception? Stay tuned. This battle should be interesting to watch.

Reader Comments

KentChan

June 8, 2007 3:22 AM

Nothing so great about these Chinese knock offs. They are 'winning' purely because of the censorship imposed by the Chinese government. In a truely free market, their American counterparts will easily beat down hands down.

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Bloomberg Businessweek’s team of Asia reporters brings you the latest insights on business, politics, technology and culture from some of the world’s biggest and fastest-growing economies.

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