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China's Mobile Economy by Xiaodong Lee, Dominic Barton, Winston Ma

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Chapter 10 Launched in China

No one would have imagined that Amazon in China could become a customer of its local competitor, Alibaba. But since Amazon opened a flagship store on Alibaba's online marketplace Tmall in early 2015, it has become just that. Tmall offers virtual storefronts and payment portals to merchants, such as Amazon, who use its site in order to access end customers. In return, Amazon pays a commission on each sale on its Tmall outlet.

For Amazon, which is struggling to expand its independent e-commerce operation in China, setting up an online store on Tmall represents a major shift to its strategy. In the US, Amazon is synonymous with e-commerce, but since entering the Chinese market about a decade ago, the company has been fighting an uphill battle with local contenders, such as Alibaba and JD.com. Currently its domestic rivals Alibaba and JD.com control about 90% of the e-commerce market, which means that the world's largest internet retailer is a small player with less than 2% of the total market share.

From its online shop on Tmall, Amazon caters to Chinese consumers’ rising appetite for imported products. As one of the first major non-financial companies to set up operations in the Shanghai Free Trade Zone, Amazon promised customers competitive pricing, relatively fast shipping and a guarantee of the authenticity of the imported goods that it sold, all of which played to its strength as a true global brand. While foreign retailers are unable to compete ...

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