Amazon Name Shift Signals China Ramp-Up 亚马逊改名背后折射中国野心
It’s difficult to read too much into a simple name change, but US e-commerce leader Amazon’s (Nasdaq: AMZN) decision to rebrand its China operation as Amazon China, combined with the opening of a major new facility, appears to signal a major ramp-up in its Chinese business. If true, that could mean bad news for established players like Dangdang (NYSE: DANG), 360Buy and Alibaba’s Taobao Mall, as Amazon has far more resources than most of these Chinese companies and, unlike most of them, is quite profitable. But let’s look at the news first. Domestic media are reporting that more than 5 years after purchasing Chinese online merchant Joyo.com, Amazon has finally decided to rebrand the company as Amazon China, from its previous name of Joyo Amazon. (English article) Amazon is making the change as it opens its 10th China facility, a massive 120,000-square-meter warehouse in the city of Kunshan, near Shanghai and within easy driving distance of hundreds of millions of consumers in the affluent Yangtze River Delta area. The new facility increases Amazon’s warehouse space in China by almost 50 percent, and quadruples its space in the Yangzte River Delta area. That kind of rapid ramp-up, combined with the name change, strongly indicate the company is planning a major boost in its China operations, just as the market appears to be getting overheated with rampant competition from a big field of young start-ups like 360Buy, which wants to make a multibillion-dollar IPO to recoup some of the $1 billion-plus in investor dollars it has received to date. (previous post) Amazon’s timing also looks good with regard to Taobao Mall, one of the few profitable companies in the space, which is going through a credibility crisis after many of its smaller merchants rebelled following a steep fee hike. (previous post) All that said, look for Amazon, riding high on the popularity of its Kindle e-readers and newly launched tablet PCs, to become an increasingly hot name in the China e-commerce space over the next 2 years at the expense of existing players.
Bottom line: Amazon’s rebranding of its China business and opening of a major new facility indicate a coming ramp-up of its Chinese business, further heating up the ultra-competitive market.
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