The world's most powerful online retailer bet on the world’s biggest market and walked away with almost nothing
In the summer of 2004, Amazon was hungry for China. More than 80 million people were already online there, the number was climbing fast, and Jeff Bezos wanted in. There was just one problem: Amazon couldn’t simply show up and start shipping books in Beijing. It needed a way in, and the obvious move was to buy one.
Its first target was Dangdang, a fast-growing Beijing online bookstore that people liked to call “the Amazon of China.” According to reports at the time, Amazon spent months negotiating and offered a huge sum, by some accounts up to a billion dollars, for a company with modest sales. Dangdang’s founders said no. Amazon wanted control, and they weren’t willing to give it up. Years later, Dangdang’s co-founder Li Guoqing claimed Amazon had warned them that if they didn’t sell, it would start a price war.
So Amazon went to plan B. In August 2004, it bought Dangdang’s main rival, Joyo.com, then China’s largest online seller of books, music, and videos, for about $75 million. It was a bargain by Silicon Valley standards. Bezos announced he was “very pleased” to be entering China, and Amazon got a foothold in a market that would one day become the biggest online shopping market on earth.
Fifteen years later, it would be almost entirely gone.
The war over books
The first battle was fought over books, and it was brutal. Li Guoqing later described Amazon running software every night to scan Dangdang’s prices, then undercutting tens of thousands of books by a yuan, or even a fraction of one. Dangdang fought back, book by book.
Amazon assumed it knew how to win, because it always had. It had bulldozed rivals in Britain, Germany, France, and Japan, and it brought the same playbook to China: the same website design, the same systems, the same careful way of running a global operation. That was precisely the problem. Li later said Amazon’s decision-making was slow, because every big call ran through a multinational chain of command. Dangdang could change course in an afternoon. Amazon couldn’t.
Dangdang held its ground and went public on the New York Stock Exchange in 2010. Amazon kept the Joyo name for a while, then rebranded the site as Amazon China. By some estimates, it once held around 15 percent of China’s online retail market. But the real threat wasn’t coming from another bookstore.
The crocodile in the Yangtze
While Amazon and Dangdang fought over books, a former English teacher in Hangzhou named Jack Ma was building something very different. His company, Alibaba, had launched Taobao, an online marketplace where anyone could set up a shop, and listing products was free. In 2006, Taobao had already driven eBay out of China. Ma famously compared eBay to a shark in the ocean and himself to a crocodile in the Yangtze River: in his home waters, the crocodile wins.
Alibaba understood something Amazon was slow to grasp. Chinese shoppers in the 2000s didn’t trust online sellers or online payments. So Alibaba built Alipay, which held a buyer’s money until the goods arrived safely. Chinese shoppers also liked to haggle and chat with sellers, so Taobao let them message shop owners directly. Online shopping became social, a bit like a market stall. Alibaba then turned November 11, a tongue-in-cheek holiday for single people, into Singles’ Day, the biggest shopping event in the world.
Meanwhile, another rival, JD.com, did what Amazon was supposed to be best at. It built its own warehouses and its own delivery army, and it got goods to customers astonishingly fast, often the same day in big cities. JD was beating Amazon at Amazon's own game.
Amazon did keep trying. It launched the Kindle in China in 2013 and Prime membership in 2016, with free shipping on imported goods. But the market was racing ahead. By the end of 2018, Alibaba’s Tmall had about 62 percent of China’s business-to-consumer online sales, and JD had about 24 percent. Amazon’s share was 0.6 percent.
In April 2019, Amazon told the sellers on its Chinese site that it would stop providing them services on July 18. Fifteen years after buying Joyo, Amazon was shutting down its domestic marketplace. Chinese shoppers could still buy imported goods from its global store, and Amazon would keep running its cloud business and selling Kindles. But in the competition to sell to China, Amazon had lost.
And then came the twist. The one thing Amazon got truly right in China was the Kindle.
The Kindle's surprising triumph, and its fall
The Kindle arrived in China in 2013 and became a sensation. Millions of devices sold over the next five years, and by the end of 2016, China had become the Kindle's biggest market in the world, bigger than the United States. One internal Amazon document reportedly said China made up more than 40 percent of global Kindle device sales by the end of 2017. Amazon worked with major Chinese publishers to digitize their catalogs and helped build China’s e-book market almost from scratch. For a few years, Amazon was the undisputed king of Chinese digital reading.
Then the market moved, again. Chinese readers increasingly read on their phones, using apps full of free or cheap web novels sold by the chapter. Local tech giants such as Huawei, Xiaomi, and iFlytek launched their own e-readers with features Chinese readers wanted. Kindles started gathering dust, and Chinese social media began joking that the device’s real purpose was to serve as a lid for a cup of instant noodles while they steeped.
In June 2022, Amazon announced on Weibo, China’s Twitter-like platform, that it had stopped shipping Kindles to Chinese retailers. The Kindle e-book store would close on June 30, 2023, and readers would have one more year to download books they had already bought. Chinese readers responded with an outpouring of nostalgia and grief.
There’s one more irony worth noting. The founder and chairman of Joyo, the company that sold Amazon its foothold in China, was Lei Jun. A few years after the sale, he co-founded Xiaomi, which became one of China’s biggest tech companies and one of the local rivals that made e-readers competing with the Kindle.
What China taught Amazon
It’s tempting to blame politics: China’s government, censorship, tensions between Beijing and Washington. Those things mattered for many Western tech companies, and Amazon’s relationship with Beijing was never simple. But Amazon itself said the Kindle exit wasn’t caused by government pressure, and the marketplace story is mostly a business story. Amazon was outcompeted.
The lesson is the mirror image of Borders. Borders failed because it handed the future to someone else. Amazon failed in China because it assumed the future would look the same everywhere. It brought a playbook that had worked in Seattle, London, and Tokyo, and ran it in a market where trust worked differently, payments worked differently, shopping worked differently, and, in the end, reading worked differently.
Amazon’s rivals didn't beat it by copying it. Alibaba made shopping social and solved the trust problem. JD outdelivered the world's most famous delivery machine. Phone apps outsold the Kindle by understanding how Chinese readers actually wanted to read.
It's a reassuring lesson for anyone who feels outgunned by a giant. Amazon is not invincible. In the world's biggest market, a bookstore that refused to sell, a former English teacher, and a few cups of instant noodles proved it.
0 comments