Amazon’s Chinese joint venture ‘in merger talks with ecommerce giant Kaola’
Ecommerce is more attractive in China in part because consumers there say they buy products online ‘more for convenience than price’
Bengaluru —Amazon.com's Chinese joint venture is in talks about a merger with local ecommerce firm Kaola, which sells imported products in the Asian country, business magazine Caijing reported on Tuesday.
Kaola, owned by Nasdaq-listed NetEase, sells apparel, household appliances and other products, and is the biggest among Chinese shopping sites that focus on imported goods, followed by Tmall Global and JD Worldwide, according to a report from consulting agency iiMedia. Read the report here.
It buys goods directly from overseas manufacturers and last year it imported more than 5,000 brands from 80 countries.
Amazon said it did not comment on market speculation. NetEase declined to comment.
NetEase shares rose 3.5% to $235.50 in early trade in New York.
While Amazon's profits and sales are growing strongly, it has pumped billions of dollars into developing markets including India and China in the hopes of generating future profits. Its international operating loss dipped to $642m in the fourth quarter from $919m a year earlier.
Ecommerce is more attractive in China than in other markets, in part because Chinese consumers say they buy products online more for convenience than price, according to a report by Boston Consulting Group. Read the report here.
But operating in China, at a time of rising trade tensions between Beijing and Washington, has proven a hard nut for US tech heavyweights to crack.
Uber sold its China operations to bigger local rival Didi Chuxing in 2016, after a bruising two-year battle. Alphabet's Google, which quit China in 2010, has been seeking ways to re-enter a market where many of its products are blocked by regulators.
As of mid-2018, China's Alibaba Group Holding led the ecommerce market in the world's second-largest economy with a 58.2% share, followed by local rival JD.com.
Amazon was a distant seventh with a less than 1% of market share, according to research firm eMarketer.