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Amazon China to close local marketplace and place more focus on cross-border

Amazon has finally given up the battle with Chinese online shopping giants to catch the domestic market. On Thursday, the Seattle-based e-commerce company announced it will shut down its market on Amazon.cn, which connects continent Chinese buyers and sellers, while other units of its local escapade will stay intact.

“We are working closely with our sellers to ensure a smooth transition and to continue to consign the best customer experience feasible,” an amazon spokesperson told TechCrunch, adding that this segment of the business will end on July 18.

The partial retreat, first reported by Reuters and Bloomberg, is indicative of the relentless e-commerce race in China where Alibaba and JD.com dominate, with immigrant Pinduoduo closing on the incumbents’ heels.

But this is hardly the end of Amazon’s China tale. The American giant has over the years attracted waves of cross-border sellers, many of whom have hailed from China’s traditional export industry looking to vend cheaply manufactured goods to consumers around the world for lucrative margins. To date, Chinese export suppliers are able to vend to 12 countries that include India, Japan, Australia, Canada, the United States and five Western European countries.

Other international e-commerce players also have their eyeballs set on the massive raft of goods flowing out of China, though each comes with a distinct geographic focus. Alibaba-backed Lazada, for instance, is the bridge between Chinese merchants and Southeast Asian shoppers, while Jumia, which just listed in the U.S., exports from China to Africa.

“The biggest appeal [of exporting through Amazon] is the low costs because we are close to a lot of supply chain resources,” a shenzhen-based vendor selling water-resistant placemats on Amazon told TechCrunch.

In the meantime, China has developed a huge craving for imported goods as middle-class consumers now require higher-quality products. Amazon is in the import business, too, although it lags far behind more entrenched players such as Alibaba, of which Tmall international takes the govern with 29 percent market share in the cross-border e-commerce space, according to data from iResearch, dwarfing Amazon’s 6 percent.

That could change if Amazon finds a prominent local partner. Rumors have swirled for months that Amazon was reportedly in talks to merge its import unit with Kaola, the cross-border shopping business run by Chinese internet giant NetEase with a 22.6 percent market share.

Not to be forgotten, Amazon also offers cloud computing services to Chinese enterprises, although, in this space, it’s again in a direct face-off with Alibaba Cloud, the dominant player in China. Lastly, China remains the largest market for Kindle, so pivotal that the e-reader launched a localized version just for China.

“Over the past few years, we have been evolving our China online retail business to increasingly emphasize cross-border sales, and in return we’ve seen very powerful response from Chinese customers,” said the Amazon spokesperson. “Amazon’s commitment to China remains powerful—we have built a hard foundation here in a number of successful businesses and we will continue to invest and grow in China across Amazon international Store, international Selling, AWS, Kindle devices and content.”

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TechCrunch
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