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Amazon’s China unit in merger talks with NetEase, the Kaola: report

(Reuters) – Amazon.com Inc the Chinese joint venture is in discussion about a merger with the local e-commerce company Kaola, which sells imported products in the Asian country, business, Caijing magazine reported Tuesday.

The logo of Amazon is seen on the door of an Amazon Book store in New York City, united states, February 14, 2019. REUTERS/Brendan McDermid

Kaola, owned by Nasdaq-listed NetEase, Inc., sells clothing, household appliances and other products and is the largest of the Chinese shopping sites, which focus on the imported goods, followed by Tmall Global and JD Worldwide, according to a report from consulting firm iiMedia.

It buys goods directly from overseas manufacturers and last year imported more than 5,000 brands from 80 countries.

Amazon told Reuters it did not comment on speculation. NetEase declined to comment.

NetEase shares rose 3.5 percent to $235.50 in the beginning of trading in New York.

While Amazon’s profit and revenue is growing strongly, it has pumped billions of dollars into the development of markets, including India and China in the hope of generating future profits. The international operating loss baptized $642 million in the fourth quarter of $919 million a year earlier.

E-commerce is more attractive in China than in other markets, in part because the Chinese consumers say they buy products online more for the convenience than the price, according to a report by the Boston Consulting Group.

But operating in China, in a time of rising trade tensions between Beijing and Washington, has proven a hard nut for the US tech heavyweights to crack.

Uber sold its China operations and larger local rival Didi Chuxing in 2016, after a bruising two-year battle. Alphabet, Inc. ‘ s Google, which quit China in 2010, is looking for ways to re-enter a market where many of the products are blocked by the regulators.

From mid-2018, the chinese Alibaba Group Holding, led the e-commerce market in the world’s second largest economy with a 58.2 percent share, followed by local rival JD.com. Amazon was a distant seventh with a less that 1 percent market share, according to research firm eMarketer.

Reporting by Sayanti Chakraborty, Supantha Mukherjee and Amy Caren Daniel, Bengaluru, Brenda Goh in Shanghai and Kane Wu in Hong Kong; Editing by Sai Sachin Ravikumar and Patrick Graham

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