Bengaluru: Amazon.com Inc.’s retreat from China will allow the e-commerce giant to free up resources to sharpen its focus on India, its largest market outside of the US. The Seattle-based company will shut down its Chinese marketplace business, while shifting its focus to offer mainland consumers overseas products rather than goods from local sellers, says a Bloomberg report.
Amazon’s decision to shut its Chinese marketplace business after struggling to compete with local rivals such as Alibaba Group Holding Ltd and JD.com also underscores the growing importance of India, which has become Amazon’s most important international market in the past few years.
Amazon stands a better chance of succeeding in India as the e-commerce sector in the country is already dominated by two US companies—Amazon India and Walmart Inc.-owned Flipkart—which, between them, are estimated to account for more than 80% of e-commerce market revenues.
“Over the decades, China’s government has strategically enabled Chinese companies to build unassailable dominant positions in the domestic market," said Devangshu Dutta, chief executive of consulting firm Third Eyesight. “This applies to the most basic manufacturing and the most advanced technology companies."
Walmart acquired 77% of Flipkart last year.
The Arkansas, US-based retailer is now focusing more on the Indian e-commerce market that is expected to reach $200 billion in revenue by 2027, according to Morgan Stanley’s estimates.
Earlier this week, Walmart chief executive Doug McMillon visited the Flipkart office to discuss the strategy of maintaining its lead over Amazon in India.
However, some analysts say Amazon’s retreat from China does not necessarily mean an increased focus on India.
“Amazon has been in the process of winding down in China for a while now—they were not investing any resources in that country," said an analyst aware of the matter. “So, this move does not mean it will shift resources from China to India."
The company has, however, made several capital infusions into its Indian entity over the years. In December, Amazon India received ₹2,200 crore from its US parent entity, which was the fourth tranche of capital infusion. In 2016, founder and chief executive officer Jeff Bezos committed $5 billion to the India business.