24 ms·

Amazon Quits China Market

339 points by Pandaily 8y ago

coldcode 8y ago
Another non-Chinese giant being driven out of the Chinese market by Chinese leadership. Of course its their country and their rules.
- mtgx 8y ago
  It doesn't prevent American companies from handing over all of their tech IP to China (the one that wasn't already stolen) and attempt to do their bidding at every step. So it's win-win for China -- there's another (American firm) sucker born every minute looking to "enter the huge Chinese market", and the Chinese gov is taking full advantage of that (ultimately) hopeless dream.
  - NicoJuicy 8y ago
    It seems to be previous generation tech though
    - meddlepal 8y ago
      Which is still a better starting point than nothing. On one hand it sucks that China is abusing its position in the global market, but on the other hand I am really not shedding any tears for greedy corporate America getting screwed for once.
      - javajosh 8y ago
        Sadly, it's not just greedy "corpo 'merka" getting screwed. Plenty of scrappy software startups with stars in their eyes have services and products that would really improve Chinese lives, but can't or won't operate in-country because it is entirely too much risk.
        xj9 8y ago
        my impression is that this is exactly what China wants. what do they have to gain from allowing american companies into their market without some hurdles? it is far more beneficial to china to encourage local business development.
- NicoJuicy 8y ago
  And when would do something similar, the are going to try to retaliate in another way...
  - teknologist 8y ago
    With "hurt feelings", probably.
- HatchedLake721 8y ago
  Seems like you haven’t read the article, have you? What Chinese leadership are you talking about? Just read the comments here, Amazon is lagging behind JD and others
cletus 8y ago
This is why I don't get why companies--tech giants in particular--kowtow to China in the hopes of getting access to the Chinese market. It will never happen. At least, it won't be open access. You'll have to play by Chinese rules (ie integration with the Great Firewall, storing data in China, probably integration with social credit and so on). Worse, there might be (basically forced) "IP transfer". Even after all that, the government will make sure that you don't dominate any market. There'll be a Chinese version for that. There is absolutely zero point in trying to mollify the Chinese government.
- supahfly_remix 8y ago
  "kowtow" -- nice word choice! "In traditional China this ritual was performed by commoners making requests to the local magistrate, by the emperor to the shrine of Confucius, or by foreign representatives appearing before the emperor to establish trade relations." https://www.merriam-webster.com/dictionary/kowtow https://www.merriam-webster.com/dictionary/kowtow
  - BoorishBears 8y ago
    I hate the way I've at least seen people use that word in the US. They almost exclusively use it in reference to China, and it's just awkward. Not racist, but just weirdly racial the way they use it and the tone is gross. Hard to put into words. Apparently this is a controversial revelation to some of you: https://blog.hiddenharmonies.org/2010/12/23/my-pet-peeve-racial-slur-and-a-small-every-day-insult/ https://blog.hiddenharmonies.org/2010/12/23/my-pet-peeve-rac...
    - jimrhods23 8y ago
      Why wouldn't you use in reference to China? It originates from the Cantonese language (probably because of the amount of Cantonese speakers in San Francisco back in the day) and in China.
      - BoorishBears 8y ago
PakG1 8y ago
What's with these comments that Amazon couldn't win in China because they didn't play well by Chinese rules? The article paints a pretty compelling picture that the issue is that Amazon couldn't compete well with local companies. If they were that bad at competing, they wouldn't need conflict with the government to fail, failure would be a natural effect of being unable to keep up with local competition.
- ma2rten 8y ago
  I think it's a knee-jack reaction. People didn't even read the article, but decided that this is what must have happened.
- yibg 8y ago
  Probably a combination of a few things: 1) Western audience of HN that have only witnessed the dominance of Amazon so have a hard time imagining a better competitor. 2) Ongoing negativity towards china in this area. Put the two together, and China must be cheating for Amazon to not win. I think most people underestimate how difficult it is to compete on local turf (even without political handicaps). In fact it may very well be that Alibaba and JD are in fact the better services and would be dominating in the west if not for the same home turf advantage.
  - teknologist 8y ago
    More like home turf nuances. China domestic shipping relies on very low paid workers working very long hours. On top of that, Amazon have already established their delivery infrastructure in a much more expensive environment. It would be tough for JD/Taobao to break in at this point.
ConfusedDog 8y ago
As a person have actually used TaoBao, JD, and Amazon.cn, I can tell Amazon.cn was far behind them on both execution and product variety. I only have a vague impression of China's rules imposed on business, if they did, for sure Amazon was screwed so badly it didn't move a single inch over the past few years. Literally done nothing at all to compete. I'm not surprised they gave up.
- contingencies 8y ago
  Never used z.cn but saw a few neighbours ordering from them in Shenzhen. Probably recent tech books in English I guess. I did try AWS in China and it was absolutely shocking. Clearly they never prioritized China and the inevitable happened. I run a business in China, it's not easy but it's interesting.
  - ConfusedDog 8y ago
    I heard AWS works in China, just not sure how well. Considering the GFW, I wouldn't have chosen it for projects serving Chinese users. Likely same consumer mentality is also playing a part against Amazon.cn and other foreign tech giants.
    - baybal2 8y ago
      A local company bought a franchise for AWS from Amazon in China
  - philsnow 8y ago
    In amazonaws.cn there's no KMS and they only gave the ability to use virtual MFA devices at the end of 2017 [0] All of this is to say nothing of the additional restrictions imposed by the government -- I agree with contingencies that it's "not easy" to run a business in (AWS) China, but I think that at this point everybody who's seriously thinking about doing so knows what to expect. [0] https://www.amazonaws.cn/en/new/2017/now-add-additional-protection-to-your-aws-accounts-by-enabling-virtual-mfa-during-sign-in/ https://www.amazonaws.cn/en/new/2017/now-add-additional-prot...
StopHammoTime 8y ago
Amazon's model has been a "central place for everything". Culturally, China seems to be more open to having ten million places to get their specific things they need. Having a central online store is not a big deal for them.
- OrgNet 8y ago
  Do they have the equivalent to a shopping mall that allows them to easily find smaller online stores?
  - baybal2 8y ago
    That's how Taobao worked from day 1
atomical 8y ago
> Liu also bought items on Amazon.cn only to find disappointment, as it took him two days to receive them. “How could they call that two-day delivery,” Liu said. What is he saying?
- echan00 8y ago
  I was just about to re-quote this. If you have lived in China before you would understand and agree that two days (the Amazon Prime gold standard) is considered too slow in China.
  - cromwellian 8y ago
    But if you're lived in China and used JD or other delivery companies, you have to agree that the delivery fee is insanely cheap for same-day delivery, and that this gig work seems on borrowed time, the costs are going to increase, and the question is, will JD be able to keep this up? Amazon is using proven multi-decade logistics companies for delivery, so it's pretty certain their internal cost structures are rational. How much are the JD trucks and delivery guys being paid? How above board is JD's finances? What are they getting from the governments? Perhaps it's just another WebVAN. These things are never quite clear in China, transparency and public audits are not present.
    - baybal2 8y ago
      Alibaba outsourced logistics to a big extend. There is their own Cainiao, but it is just a franchise front for small delivery companies. They pay market rate, and that's nothing unreal when most Chinese live in densely built up apartment blocks (a big difference from USA)
      - cromwellian 8y ago
        The density only partially helps, because there is still an overhead in even a single delivery that has to be paid. I'll give you an example, 饿了吗 will deliver food for 5-10 RMBdelivery fee in Shanghai. I would often order say, 生煎包 for 8 RMB and pay 5RMB delivery. A guy on a delivery bike would take like 15-30 minutes to deliver, and I often noticed they only delivered one order in my condo (his bike had nothing else in the basket), and just getting from the street to my condo's door, ringing the phone, and having me buzz him up the elevator would consume 5-10 minutes of his time getting in/out of the place and back to his next delivery. Shanghai minimum wage is 2500 RMB/mo. So in order to make minimum wage, this guy would need to make 500 orders in 30 days, or 16 deliveries per day. In an 8 hour day, could he pick up and make 16 deliveries? Sure, but it's tight, and obviously at some point, they have to pay the delivery guys more. And they have, but in order for O2O players to pay more to the delivery people, they've ended up charging more to the restaurants, and so the restaurants have then ended up raising the prices on the menus displayed. So this indicates that the current O2O system in China wasn't stable. Despite massive revenues, the heavy competition, discounts, and artificially low introductory fees, and ease of switching, doesn't give me confidence their current structure will work. And 饿了吗‘s logistics seem pretty chaotic to me and no different than Postmates or Doordash in the US. I rarely saw delivery bikes loaded down with multiple orders, because 15-30 minute delivery windows pretty much dictate a point-to-point delivery, rather than a hub and spokes model.
product50 8y ago
Amazon has literally won everywhere else in the world. But in China they were slow at execution? Does this read right to you? Or maybe there is a regulatory angle which no one is talking about because...China.
- PakG1 8y ago
  Living and working in China and having experienced Amazon's competitors, yes, that does read completely right to me. Amazon is crushing it at everything back home. I don't hesitate to buy many things from Amazon when at home. But in China, the jd.com and taobao.com experience is way better than what I experience from Amazon when I'm at home.
  - JamesBarney 8y ago
    I'm curious is this because jd.com is far ahead of American Amazon or because Chinese Amazon is far behind American Amazon?
    - zzh8829 8y ago
      Having lived in both China and US/Canada, I would say jd and taobao is far ahead of American Amazon. Some key differentiators include delivery speed, UI/UX, product offerings and the ability to chat with merchants instantly.
      - cthalupa 8y ago
        Amazon has same day delivery and prime now in a lot of the US - I can get the same order before 10 get before 18 from Amazon in my town. I don't have a ton of experience with UI/UX on JD or TMall, but my experience with alibaba and aliexpress hasn't left me particularly impressed there. But I also have no problem with Amazon's interface and experience in general, which I know lots of people don't like. Product offerings have never been an issue for me. The overwhelming majority of my online purchases come from Amazon, and the ones that haven't made recently have been pretty niche - handmade Japanese chef knives, limited run board games, manufacturer direct audio equipment... I can get assembly for furniture, etc., as an add-on for a lot of purchases on amazon, which someone mentioned as a differentiator in another thread. I can't talk to the merchants instantly, but I don't know that I really want or need to. I rarely have a question for them, and when I have, I generally don't want to get bogged down in a live chat or phone call or whatever, so the email system on Amazon works fine for me.
Proven 8y ago
Failing yes, but why? It's a shitty place to do business for non-CCP affiliated companies.
exabrial 8y ago
It's hard to compete against government sponsored monopolies inside China. There's also a huge nationalism sentiment brewing in China and distrust growing for western companies and nationals from other countries. It's sort of hard to wrap your head around these concepts as a westerner, because we start form two different places of thinking; in China, the government is your way of life, as long as it doesn't interfere with your daily life. The constructs of intellectual property, property rights, etc aren't present
- dangus 8y ago
  It's hard to compete when you're not competitive. Amazon still runs AWS in China with a Chinese partner. This is just Amazon.cn being unable to compete with local alternatives like Taobao. What you're saying isn't wrong but I don't think it's particularly relevant to this situation.
  - exabrial 8y ago
    What about Uber and DiDi?
    - deleted 8y ago
      [deleted]
eledumb 8y ago
Amazon is being smart. They know the Chinese will steal every bit of IP/Technology they can, and then once they've extracted all the juice they'll create market conditions that make it impossible for the foreign company to remain successful. China has been running this program on everyone since they started with the Communist/Open market concept. It's just amazing that companies still haven't caught on. The lure of big money blinds the greedy.
- taobility 8y ago
  As a nation, isn't that the right strategy to survive and develop? Why China should always do the low end manufacture work? As a people, would you always do the handy work if you have chance to learn from others and do a white collar job?
- ssnistfajen 8y ago
  Some people always have a myriad of excuses to cover up what appears to be simply a failure to stay competitive in a highly competitive market. Learn to read the article next time.
  - yhoneycomb 8y ago
    this guy has a clear anti-China bias got into it with him on another post
nicodjimenez 8y ago
They are quitting the B2C e-commerce market, not the B2B market. B2C is an area where China is in many cases more advanced than the US, especially when it comes to mobile apps. US is more web app centric and China is more mobile app centric. China has really good apps like WeChat for which there doesn't exist an equivalent in the US. Also it does look like Amazon in general is putting more resources into it's higher margin businesses (eg AWS and Echo) than e-commerce.
manigandham 8y ago
This has nothing to do with communications or product development. China will not let a non-Chinese company ever gain top position in any sector. That's how the government works. And yes the article is bullshit because this same government won't allow any negative press about their actions either. These Pandaily journalists will have a very hard time if they actually wrote about the real environment there.
- tanilama 8y ago
  Amazon isn't near top ever in China, it is like 1-2 percent of the market share. Not that different than Microsoft sunset their gaming business in Japan
  - manigandham 8y ago
    Amazon will never get greater market share because China's govt won't let them. Microsoft did not leave Japan, they are in fact expanding Xbox Asia and have added an Asian team to the Global Gaming Partnership and Development (GDDP) division: https://www.google.com/search?q=xbox+asia+expanding https://www.google.com/search?q=xbox+asia+expanding
    - AsyncAwait 8y ago
      It seems to me that in these kinds of topics, someone always tries to pin the majority of the blame on Chinese protectionism. While that's certainly a factor, it seems Amazon has not been able to capture anywhere near the market share foreign companies operating in China are regularly allowed to capture, (before feeling the pressure). So sometimes, (like in this case, it looks like), it may just really be the case of a business not being able to adopt to the different expectations of Chinese consumers. I was just reading the other day about why U.S. car makers struggle in Japan and that for example domestic car makers there offer the ability to customize the car to an extent U.S. companies can't compete with. It's likely that Amazon faced enough competition naturally, given its low market share.
    - tracker1 8y ago
tanilama 8y ago
Amazon is out of China not because of CCP but capitalism. If you ever bought stuff from Amazon.cn you would know what I am talking about.
hart_russell 8y ago
Jesus, the amount of China govt shills in this thread...
seemuch 8y ago
I am so sad to see how the comments under this post manifest. People just blindly pointing fingers to the big evil Chinese government for the failure, without any evidence whatsoever. I get it, failures are hard. But you can face it and learn to be responsible for it. All grownups do that. I think American are transitioning from a bunch of doers to a bunch of whiners.
- bleriot 8y ago
  Do you deny that the Chinese government makes it extremely difficult for US companies to operate there?
  - SZJX 8y ago
    And that must be why Microsoft, Nike, Starbucks etc. failed so miserably, right? And could you explain how exactly the Chinese gov made things difficult for Amazon? Seriously this whole thread is just amazing, tragic and downright sad.
seemuch 8y ago
The discussion in this thread shows how blind people are about China's development. They are pointing fingers to the Chinese government partly because they simply cannot imagine how much better the China competitors are. The US do have some advantages in the IT industry, but that advantage is getting slimmer and slimmer. In fact, in so many ways, people in China are enjoying much better services from the internet companies than people in the US. But people in the US simply cannot see it, and cannot believe it. For ordinary people, I don't blame them. But most of people on HN are from this industry, and they are the same! This just makes me speechless.
- luckydata 8y ago
  Or maybe we just don't agree.
- Cookingboy 8y ago
  Seriously, Alibaba's e-commerce side operates at a scale that makes Amazon's entire North America (if not global) operation look like a 7/11 store hosted on Geocities. Last year on Single Day alone, Alibaba handled over $30B in orders with 24 hours, and more impressively those are spread over 1,000,000,000 separate deliveries orders. It means it handled the ordering and payment processing of 11,574 orders per second, and then fulfilled and delivered those ONE BILLION orders within the next 48 hours. Can you even imagine being an Alibaba warehouse worker during that couple days?
  - teknologist 8y ago
    Would not go as far as to say "delivered" in 48 hours. Shipping can be relatively slow during those promotional days and the app even shows delay warnings on the cart screen / checkout.
    - Cookingboy 8y ago
      >Shipping can be quite slow True, but remember "slow" means something quite different in China where same/next day delivery is very often expected in top tier big cities. So 3-5 days delivery is definitely considered slow, and during these crazy period you may see the glacier speed of one week delivery time :)
nickolas_t 8y ago
I never thought I would see so much astroturfing on Hacker News, "read the article read the article". The website's slogan is literally "Everything about China's Innovation". It's biased and or unable to talk plainly about the market conditions in China, the rules are set by the government and they make sure Chinese companies always dominate.
yadaeno 8y ago
In online retail, shipping speed and selection are what entice customers. I'd argue that the UX and promotion landscape are moot past a certain point. Fast shipping and selection comes down to infrastructure. China is spread out, this means each FC must carry more stock on average, and you need more FCs per person to reduce shipping time. Markets like Japan and small EU countries are juicy targets for this reason (which is why you see so much investment there). And then there's 'regulatory challenges' Each FC requires large amount land, development, and employees. These types of projects require a high level of cooperation of the government to be worth the investment. This doesn't pair well with a government that is notoriously unwelcoming to foreign business.
- SZJX 8y ago
  This is at least a more reasonable take on the matter than those pointing fingers at the big, evil Chinese government without any clue what they're talking about.
Sutanreyu 8y ago
Should be obvious... Amazon has become a peddler of goods manufactured in China, at inflated prices. Why would they pay more for the things they can get cheaper locally?
EnderMB 8y ago
Purely as an outsider looking at the regular China tech posts with interest over the years, it feels like there's a common thread, where US tech giants look at the Chinese market and rub their hands with glee, expecting to simply place an office there and integrate as they do everywhere else, only to find an existing ecosystem they seemingly have no knowledge of - and instead of studying that ecosystem and improving their product globally they bow out when China doesn't seem to be as "easy" as first thought. Obviously, this is a gross over-simplification of the situation, but it feels weird that FAANG-size tech companies seem to all be making the same mistakes by embedding their services into a packed marketplace and being arrogent enough to expect to beat pre-existing competition. Outsiders may claim (and rightfully so) that China has a bias towards Chinese companies, but this bias doesn't seem to be the reson why the likes of Amazon and Google fail in China.

339 points by Pandaily 8y ago

Another non-Chinese giant being driven out of the Chinese market by Chinese leadership. Of course its their country and their rules.

mtgx 8y ago
It doesn't prevent American companies from handing over all of their tech IP to China (the one that wasn't already stolen) and attempt to do their bidding at every step. So it's win-win for China -- there's another (American firm) sucker born every minute looking to "enter the huge Chinese market", and the Chinese gov is taking full advantage of that (ultimately) hopeless dream.
- NicoJuicy 8y ago
  It seems to be previous generation tech though
  - meddlepal 8y ago
    Which is still a better starting point than nothing. On one hand it sucks that China is abusing its position in the global market, but on the other hand I am really not shedding any tears for greedy corporate America getting screwed for once.
    - javajosh 8y ago
      Sadly, it's not just greedy "corpo 'merka" getting screwed. Plenty of scrappy software startups with stars in their eyes have services and products that would really improve Chinese lives, but can't or won't operate in-country because it is entirely too much risk.
      - xj9 8y ago
        my impression is that this is exactly what China wants. what do they have to gain from allowing american companies into their market without some hurdles? it is far more beneficial to china to encourage local business development.
NicoJuicy 8y ago
And when would do something similar, the are going to try to retaliate in another way...
- teknologist 8y ago
  With "hurt feelings", probably.
HatchedLake721 8y ago
Seems like you haven’t read the article, have you? What Chinese leadership are you talking about? Just read the comments here, Amazon is lagging behind JD and others

cletus 8y ago

This is why I don't get why companies--tech giants in particular--kowtow to China in the hopes of getting access to the Chinese market. It will never happen. At least, it won't be open access. You'll have to play by Chinese rules (ie integration with the Great Firewall, storing data in China, probably integration with social credit and so on). Worse, there might be (basically forced) "IP transfer". Even after all that, the government will make sure that you don't dominate any market. There'll be a Chinese version for that. There is absolutely zero point in trying to mollify the Chinese government.

supahfly_remix 8y ago
"kowtow" -- nice word choice! "In traditional China this ritual was performed by commoners making requests to the local magistrate, by the emperor to the shrine of Confucius, or by foreign representatives appearing before the emperor to establish trade relations." https://www.merriam-webster.com/dictionary/kowtow https://www.merriam-webster.com/dictionary/kowtow
- BoorishBears 8y ago
  I hate the way I've at least seen people use that word in the US. They almost exclusively use it in reference to China, and it's just awkward. Not racist, but just weirdly racial the way they use it and the tone is gross. Hard to put into words. Apparently this is a controversial revelation to some of you: https://blog.hiddenharmonies.org/2010/12/23/my-pet-peeve-racial-slur-and-a-small-every-day-insult/ https://blog.hiddenharmonies.org/2010/12/23/my-pet-peeve-rac...
  - jimrhods23 8y ago
    Why wouldn't you use in reference to China? It originates from the Cantonese language (probably because of the amount of Cantonese speakers in San Francisco back in the day) and in China.
    - BoorishBears 8y ago

PakG1 8y ago

What's with these comments that Amazon couldn't win in China because they didn't play well by Chinese rules? The article paints a pretty compelling picture that the issue is that Amazon couldn't compete well with local companies. If they were that bad at competing, they wouldn't need conflict with the government to fail, failure would be a natural effect of being unable to keep up with local competition.

ma2rten 8y ago
I think it's a knee-jack reaction. People didn't even read the article, but decided that this is what must have happened.
yibg 8y ago
Probably a combination of a few things: 1) Western audience of HN that have only witnessed the dominance of Amazon so have a hard time imagining a better competitor. 2) Ongoing negativity towards china in this area. Put the two together, and China must be cheating for Amazon to not win. I think most people underestimate how difficult it is to compete on local turf (even without political handicaps). In fact it may very well be that Alibaba and JD are in fact the better services and would be dominating in the west if not for the same home turf advantage.
- teknologist 8y ago
  More like home turf nuances. China domestic shipping relies on very low paid workers working very long hours. On top of that, Amazon have already established their delivery infrastructure in a much more expensive environment. It would be tough for JD/Taobao to break in at this point.

ConfusedDog 8y ago

As a person have actually used TaoBao, JD, and Amazon.cn, I can tell Amazon.cn was far behind them on both execution and product variety. I only have a vague impression of China's rules imposed on business, if they did, for sure Amazon was screwed so badly it didn't move a single inch over the past few years. Literally done nothing at all to compete. I'm not surprised they gave up.

contingencies 8y ago
Never used z.cn but saw a few neighbours ordering from them in Shenzhen. Probably recent tech books in English I guess. I did try AWS in China and it was absolutely shocking. Clearly they never prioritized China and the inevitable happened. I run a business in China, it's not easy but it's interesting.
- ConfusedDog 8y ago
  I heard AWS works in China, just not sure how well. Considering the GFW, I wouldn't have chosen it for projects serving Chinese users. Likely same consumer mentality is also playing a part against Amazon.cn and other foreign tech giants.
  - baybal2 8y ago
    A local company bought a franchise for AWS from Amazon in China
- philsnow 8y ago
  In amazonaws.cn there's no KMS and they only gave the ability to use virtual MFA devices at the end of 2017 [0] All of this is to say nothing of the additional restrictions imposed by the government -- I agree with contingencies that it's "not easy" to run a business in (AWS) China, but I think that at this point everybody who's seriously thinking about doing so knows what to expect. [0] https://www.amazonaws.cn/en/new/2017/now-add-additional-protection-to-your-aws-accounts-by-enabling-virtual-mfa-during-sign-in/ https://www.amazonaws.cn/en/new/2017/now-add-additional-prot...

StopHammoTime 8y ago

Amazon's model has been a "central place for everything". Culturally, China seems to be more open to having ten million places to get their specific things they need. Having a central online store is not a big deal for them.

OrgNet 8y ago
Do they have the equivalent to a shopping mall that allows them to easily find smaller online stores?
- baybal2 8y ago
  That's how Taobao worked from day 1

atomical 8y ago

> Liu also bought items on Amazon.cn only to find disappointment, as it took him two days to receive them. “How could they call that two-day delivery,” Liu said. What is he saying?

echan00 8y ago
I was just about to re-quote this. If you have lived in China before you would understand and agree that two days (the Amazon Prime gold standard) is considered too slow in China.
- cromwellian 8y ago
  But if you're lived in China and used JD or other delivery companies, you have to agree that the delivery fee is insanely cheap for same-day delivery, and that this gig work seems on borrowed time, the costs are going to increase, and the question is, will JD be able to keep this up? Amazon is using proven multi-decade logistics companies for delivery, so it's pretty certain their internal cost structures are rational. How much are the JD trucks and delivery guys being paid? How above board is JD's finances? What are they getting from the governments? Perhaps it's just another WebVAN. These things are never quite clear in China, transparency and public audits are not present.
  - baybal2 8y ago
    Alibaba outsourced logistics to a big extend. There is their own Cainiao, but it is just a franchise front for small delivery companies. They pay market rate, and that's nothing unreal when most Chinese live in densely built up apartment blocks (a big difference from USA)
    - cromwellian 8y ago
      The density only partially helps, because there is still an overhead in even a single delivery that has to be paid. I'll give you an example, 饿了吗 will deliver food for 5-10 RMBdelivery fee in Shanghai. I would often order say, 生煎包 for 8 RMB and pay 5RMB delivery. A guy on a delivery bike would take like 15-30 minutes to deliver, and I often noticed they only delivered one order in my condo (his bike had nothing else in the basket), and just getting from the street to my condo's door, ringing the phone, and having me buzz him up the elevator would consume 5-10 minutes of his time getting in/out of the place and back to his next delivery. Shanghai minimum wage is 2500 RMB/mo. So in order to make minimum wage, this guy would need to make 500 orders in 30 days, or 16 deliveries per day. In an 8 hour day, could he pick up and make 16 deliveries? Sure, but it's tight, and obviously at some point, they have to pay the delivery guys more. And they have, but in order for O2O players to pay more to the delivery people, they've ended up charging more to the restaurants, and so the restaurants have then ended up raising the prices on the menus displayed. So this indicates that the current O2O system in China wasn't stable. Despite massive revenues, the heavy competition, discounts, and artificially low introductory fees, and ease of switching, doesn't give me confidence their current structure will work. And 饿了吗‘s logistics seem pretty chaotic to me and no different than Postmates or Doordash in the US. I rarely saw delivery bikes loaded down with multiple orders, because 15-30 minute delivery windows pretty much dictate a point-to-point delivery, rather than a hub and spokes model.

product50 8y ago

Amazon has literally won everywhere else in the world. But in China they were slow at execution? Does this read right to you? Or maybe there is a regulatory angle which no one is talking about because...China.

PakG1 8y ago
Living and working in China and having experienced Amazon's competitors, yes, that does read completely right to me. Amazon is crushing it at everything back home. I don't hesitate to buy many things from Amazon when at home. But in China, the jd.com and taobao.com experience is way better than what I experience from Amazon when I'm at home.
- JamesBarney 8y ago
  I'm curious is this because jd.com is far ahead of American Amazon or because Chinese Amazon is far behind American Amazon?
  - zzh8829 8y ago
    Having lived in both China and US/Canada, I would say jd and taobao is far ahead of American Amazon. Some key differentiators include delivery speed, UI/UX, product offerings and the ability to chat with merchants instantly.
    - cthalupa 8y ago
      Amazon has same day delivery and prime now in a lot of the US - I can get the same order before 10 get before 18 from Amazon in my town. I don't have a ton of experience with UI/UX on JD or TMall, but my experience with alibaba and aliexpress hasn't left me particularly impressed there. But I also have no problem with Amazon's interface and experience in general, which I know lots of people don't like. Product offerings have never been an issue for me. The overwhelming majority of my online purchases come from Amazon, and the ones that haven't made recently have been pretty niche - handmade Japanese chef knives, limited run board games, manufacturer direct audio equipment... I can get assembly for furniture, etc., as an add-on for a lot of purchases on amazon, which someone mentioned as a differentiator in another thread. I can't talk to the merchants instantly, but I don't know that I really want or need to. I rarely have a question for them, and when I have, I generally don't want to get bogged down in a live chat or phone call or whatever, so the email system on Amazon works fine for me.

Proven 8y ago

Failing yes, but why? It's a shitty place to do business for non-CCP affiliated companies.

exabrial 8y ago

It's hard to compete against government sponsored monopolies inside China. There's also a huge nationalism sentiment brewing in China and distrust growing for western companies and nationals from other countries. It's sort of hard to wrap your head around these concepts as a westerner, because we start form two different places of thinking; in China, the government is your way of life, as long as it doesn't interfere with your daily life. The constructs of intellectual property, property rights, etc aren't present

dangus 8y ago
It's hard to compete when you're not competitive. Amazon still runs AWS in China with a Chinese partner. This is just Amazon.cn being unable to compete with local alternatives like Taobao. What you're saying isn't wrong but I don't think it's particularly relevant to this situation.
- exabrial 8y ago
  What about Uber and DiDi?
  - deleted 8y ago
    [deleted]

eledumb 8y ago

Amazon is being smart. They know the Chinese will steal every bit of IP/Technology they can, and then once they've extracted all the juice they'll create market conditions that make it impossible for the foreign company to remain successful. China has been running this program on everyone since they started with the Communist/Open market concept. It's just amazing that companies still haven't caught on. The lure of big money blinds the greedy.

taobility 8y ago
As a nation, isn't that the right strategy to survive and develop? Why China should always do the low end manufacture work? As a people, would you always do the handy work if you have chance to learn from others and do a white collar job?
ssnistfajen 8y ago
Some people always have a myriad of excuses to cover up what appears to be simply a failure to stay competitive in a highly competitive market. Learn to read the article next time.
- yhoneycomb 8y ago
  this guy has a clear anti-China bias got into it with him on another post

nicodjimenez 8y ago

They are quitting the B2C e-commerce market, not the B2B market. B2C is an area where China is in many cases more advanced than the US, especially when it comes to mobile apps. US is more web app centric and China is more mobile app centric. China has really good apps like WeChat for which there doesn't exist an equivalent in the US. Also it does look like Amazon in general is putting more resources into it's higher margin businesses (eg AWS and Echo) than e-commerce.

manigandham 8y ago

This has nothing to do with communications or product development. China will not let a non-Chinese company ever gain top position in any sector. That's how the government works. And yes the article is bullshit because this same government won't allow any negative press about their actions either. These Pandaily journalists will have a very hard time if they actually wrote about the real environment there.

tanilama 8y ago
Amazon isn't near top ever in China, it is like 1-2 percent of the market share. Not that different than Microsoft sunset their gaming business in Japan
- manigandham 8y ago
  Amazon will never get greater market share because China's govt won't let them. Microsoft did not leave Japan, they are in fact expanding Xbox Asia and have added an Asian team to the Global Gaming Partnership and Development (GDDP) division: https://www.google.com/search?q=xbox+asia+expanding https://www.google.com/search?q=xbox+asia+expanding
  - AsyncAwait 8y ago
    It seems to me that in these kinds of topics, someone always tries to pin the majority of the blame on Chinese protectionism. While that's certainly a factor, it seems Amazon has not been able to capture anywhere near the market share foreign companies operating in China are regularly allowed to capture, (before feeling the pressure). So sometimes, (like in this case, it looks like), it may just really be the case of a business not being able to adopt to the different expectations of Chinese consumers. I was just reading the other day about why U.S. car makers struggle in Japan and that for example domestic car makers there offer the ability to customize the car to an extent U.S. companies can't compete with. It's likely that Amazon faced enough competition naturally, given its low market share.
  - tracker1 8y ago

tanilama 8y ago

Amazon is out of China not because of CCP but capitalism. If you ever bought stuff from Amazon.cn you would know what I am talking about.

hart_russell 8y ago

Jesus, the amount of China govt shills in this thread...

seemuch 8y ago

I am so sad to see how the comments under this post manifest. People just blindly pointing fingers to the big evil Chinese government for the failure, without any evidence whatsoever. I get it, failures are hard. But you can face it and learn to be responsible for it. All grownups do that. I think American are transitioning from a bunch of doers to a bunch of whiners.

bleriot 8y ago
Do you deny that the Chinese government makes it extremely difficult for US companies to operate there?
- SZJX 8y ago
  And that must be why Microsoft, Nike, Starbucks etc. failed so miserably, right? And could you explain how exactly the Chinese gov made things difficult for Amazon? Seriously this whole thread is just amazing, tragic and downright sad.

seemuch 8y ago

The discussion in this thread shows how blind people are about China's development. They are pointing fingers to the Chinese government partly because they simply cannot imagine how much better the China competitors are. The US do have some advantages in the IT industry, but that advantage is getting slimmer and slimmer. In fact, in so many ways, people in China are enjoying much better services from the internet companies than people in the US. But people in the US simply cannot see it, and cannot believe it. For ordinary people, I don't blame them. But most of people on HN are from this industry, and they are the same! This just makes me speechless.

luckydata 8y ago
Or maybe we just don't agree.
Cookingboy 8y ago
Seriously, Alibaba's e-commerce side operates at a scale that makes Amazon's entire North America (if not global) operation look like a 7/11 store hosted on Geocities. Last year on Single Day alone, Alibaba handled over $30B in orders with 24 hours, and more impressively those are spread over 1,000,000,000 separate deliveries orders. It means it handled the ordering and payment processing of 11,574 orders per second, and then fulfilled and delivered those ONE BILLION orders within the next 48 hours. Can you even imagine being an Alibaba warehouse worker during that couple days?
- teknologist 8y ago
  Would not go as far as to say "delivered" in 48 hours. Shipping can be relatively slow during those promotional days and the app even shows delay warnings on the cart screen / checkout.
  - Cookingboy 8y ago
    >Shipping can be quite slow True, but remember "slow" means something quite different in China where same/next day delivery is very often expected in top tier big cities. So 3-5 days delivery is definitely considered slow, and during these crazy period you may see the glacier speed of one week delivery time :)

nickolas_t 8y ago

I never thought I would see so much astroturfing on Hacker News, "read the article read the article". The website's slogan is literally "Everything about China's Innovation". It's biased and or unable to talk plainly about the market conditions in China, the rules are set by the government and they make sure Chinese companies always dominate.

yadaeno 8y ago

In online retail, shipping speed and selection are what entice customers. I'd argue that the UX and promotion landscape are moot past a certain point. Fast shipping and selection comes down to infrastructure. China is spread out, this means each FC must carry more stock on average, and you need more FCs per person to reduce shipping time. Markets like Japan and small EU countries are juicy targets for this reason (which is why you see so much investment there). And then there's 'regulatory challenges' Each FC requires large amount land, development, and employees. These types of projects require a high level of cooperation of the government to be worth the investment. This doesn't pair well with a government that is notoriously unwelcoming to foreign business.

SZJX 8y ago
This is at least a more reasonable take on the matter than those pointing fingers at the big, evil Chinese government without any clue what they're talking about.

Sutanreyu 8y ago

Should be obvious... Amazon has become a peddler of goods manufactured in China, at inflated prices. Why would they pay more for the things they can get cheaper locally?

EnderMB 8y ago

Purely as an outsider looking at the regular China tech posts with interest over the years, it feels like there's a common thread, where US tech giants look at the Chinese market and rub their hands with glee, expecting to simply place an office there and integrate as they do everywhere else, only to find an existing ecosystem they seemingly have no knowledge of - and instead of studying that ecosystem and improving their product globally they bow out when China doesn't seem to be as "easy" as first thought. Obviously, this is a gross over-simplification of the situation, but it feels weird that FAANG-size tech companies seem to all be making the same mistakes by embedding their services into a packed marketplace and being arrogent enough to expect to beat pre-existing competition. Outsiders may claim (and rightfully so) that China has a bias towards Chinese companies, but this bias doesn't seem to be the reson why the likes of Amazon and Google fail in China.