[GLOBAL BUSINESS]

How to Compete in China’s E-Commerce Market

A surprising number of high-profile Western companies have stumbled in e-commerce in China. To succeed requires new thinking.

BY XIN WANG AND Z. JUSTIN REN

Why have so many Western companies — including heavyweights like Amazon and Google — struggled in China’s e-commerce market?

Amazon entered China’s business-to-consumer market by acquiring Joyo.com in 2004 for $75 million. From the start, it faced fierce competition, in particular from Tmall.com. Today, Amazon’s market share in China stands at 3.5%, with indigenous companies such as Tmall.com (51.5% market share) and 360buy.com (22.7%) controlling the bulk of the market.

Google entered China by setting up its local domain google.cn ...