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Amazon, with views of entrenched rivals, says to shut China online shopping

SAN FRANCISCO/BEIJING/hong KONG (Reuters) – Amazon.com Inc said that it will be closed from China online shop July 18, as the AMERICAN e-commerce giant focuses on the lucrative activities of the sales abroad of goods and cloud services in the world’s most populous country.

FILE PHOTO: Amazon.com’s logo is seen on Amazon Japan office building in Tokyo, Japan, August 8, 2016. REUTERS/Kim Kyung-Hoon/File Photo

The move underlines how entrenched, home-grown e-commerce rivals have made it difficult for the Amazon marketplace to gain traction in China. Consumer research firm iResearch Global: Alibaba Group Holding’s Tmall market and JD.com controlled 82 percent of the Chinese e-commerce market last year.

An Amazon spokeswoman told Reuters on Thursday that the report of vendors that are no longer functioning of a market, neither the seller services at Amazon.cn.

Sources familiar with the plans had told Reuters a day before that the company were planning to take such a step.

“We work closely with our vendors to ensure a smooth transition and continue to provide the best user experience,” the spokeswoman said in a statement.

“Sellers who are interested in continuing to sell on Amazon outside of China are able to do this through Amazon Global Selling.”

The sources said that Amazon shoppers in China are no longer able to buy goods of a third party merchants in the country, but they will still be able to order in the United States, Britain, Germany and Japan through the company’s global store.

Amazon will wind down support for domestic sales merchants in China in the next 90 days and the evaluation of the impact on the fulfillment centers in the country, some close, one of the people said.

“They withdraw because it is not profitable and not growing,” said analyst Michael Pachter at Wedbush Securities.

Ker Zheng, marketing specialist at Shenzhen-based e-commerce consultancy Azoya, said Amazon had no large competitive advantage in China over the domestic rivals.

Unless someone is searching for a very specific imported good that can’t be found elsewhere, “there is no reason for a consumer to choose Amazon, because they are not able to ship things as fast as Tmall or JD,” he said.

The Amazon spokeswoman said the company would continue to invest and grow in China through the Amazon Store, Global, Global Sales, Kindle e-readers and online content. Amazon Web Services, the company’s cloud computing unit, which sells data storage and computing power for companies, it will also keep.

U.S.-listed shares of Alibaba and JD.com rose 1 percent on Wednesday after Reuters first reported the move, before paring gains later in the day. Amazon’s shares closed flat.

E-COMMERCE SLOWDOWN

The withdrawal of the world’s largest online retailer founded by Jeff Bezos, who later became the world’s richest person comes in the midst of a broader e-commerce slowdown in China. Alibaba in January, reported the slowest quarterly growth since 2016, while JD.com to respond to the changing business environment with staff cuts.

It also follows the Chinese e-commerce retreat of other major Western retailers. Walmart, Inc. sold to the Chinese online shopping platform JD.com in 2016 in return for a share in JD.com to focus on the bricks-and-mortar stores.

In the same way, the country seems to factor less in the global aspirations of fellow AMERICAN tech majors Netflix Inc., Facebook Inc. and Alphabet, Inc. Google, Wedbush Securities’ Pachter said.

Amazon bought the Chinese online shopping website Joyo.com in 2004 for $75 million, rebranding the company in 2011 as Amazon China. But in a sign of Tmall, the dominance of Amazon opened an online store on the site Alibaba in 2015.

Amazon is still expanding aggressively in other countries, especially in India, where he faces local rival Flipkart.

Reporting by Jeffrey Dastin in SAN FRANCISCO, Cate Cadell and Pei Li in BEIJING, Kane Wu in HONG KONG, and Josh Horwitz and Brenda Goh in SHANGHAI; Editing by Susan Thomas, Christopher Cushing and Muralikumar Anantharaman

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