Bloomberg News

Amazon Wants Kindle to Light a Fire in China

June 10, 2013

Amazon China

Chinese customers shop for an Amazon Kindle at a mobile device market in Shanghai, China. Photograph: Imaginechina via AP Images

With the long-overdue release of the Kindle in China last week, Amazon.com will soon find out whether its line of e-readers and tablets can provide the spark that the company needs to reach the world’s largest population of Internet users.

The Kindle’s arrival is no small milestone for Amazon, judging by the splash the company made on its Chinese website. The Amazon.cn homepage was updated with a towering graphic advertising the Kindle Paperwhite e-reader and Kindle Fire HD tablet, as well as available accessories and applications.

A big push in China by the Seattle-based online-retail giant has been in the works for some time. Amazon released the Kindle e-reading mobile apps and e-book store there in December. Last month, Amazon opened its Appstore for devices running Google’s Android mobile operating system. (The Kindle Fire uses a version of Android.) Amazon is investing “heavily” in China, Thomas Szkutak, the company’s chief financial officer, said on a Jan. 29 conference call.

Jeff Bezos, Amazon’s founder and chief executive officer, saw China’s potential years ago. The company started factoring the country into its public statistics in fiscal 2010. The change helped bump Amazon’s number of active customers worldwide up to 114 million from 105 million in a single quarter.

Today, Amazon’s Chinese business is still a mom-and-pop shop compared with the competition there. Bloomberg News reported that Amazon has spent more than eight years and $74 million on an acquisition without finding success in China’s e-commerce market. Even a company valued at $126 billion can’t mess with Jack Ma’s homegrown powerhouse Alibaba Group Holding, which owns Taobao Marketplace and Tmall.

After finally overcoming regulatory roadblocks, the Kindle may not be enough. When Amazon went into the U.S. e-reader market in 2007, many people didn’t know what an e-book was. But the digital-reading revolution has already arrived in China, where e-book piracy is rampant. To compete, Amazon is pricing most of its electronic books at less than 10 yuan ($1.63) versus $10 or more in the U.S.

The Chinese frequently read books online or on their phones, but relatively few do so on an e-reader or tablet, Michael O’Grady, an analyst at Forrester Research, wrote in a report earlier this year. That’s not because there aren’t e-readers available. Beijing-based Hanvon Technology has controlled more than half the market with its low-priced readers.

Amazon, a brand known for bargains in most of the places it operates, finds itself in a more premium position with its Kindle products in China. The Paperwhite costs 849 yuan. E-Commerce China Dangdang, one of Amazon’s Chinese competitors, began selling its own e-reader there a year ago. The price: 599 yuan. This is what Bezos is up against.


The Good Business Issue
LIMITED-TIME OFFER SUBSCRIBE NOW
 
blog comments powered by Disqus