Competing with Dragons: Amazon in China

Description

Competing with Dragons: Amazon in China: Abstract

Competing with Dragons: Amazon in China is a case study by Pengfei Li.

Amazon entered China in 2004 by acquiring Joyo, a local e-retailer, and rebranding it as Amazon China, implementing the technology and practices that had worked in the U.S. Unlike its local competitors, Amazon China’s organizational culture focused on the use of technology while downplaying the importance of marketing. Amazon’s global standardization strategy thus made Amazon China less responsive to Chinese customers’ online shopping habits and less flexible in dealing with suppliers and third-party sellers on its marketplace platform.

In the first decade following its entry, Amazon China saw its market share of China’s expanding e-commerce market shrink dramatically. In 2012, it undertook strategic transformations focused on cross-border e-commerce and introduced Amazon’s other core businesses, including Kindle devices and AWS, to China. Adapted to the local market, Amazon’s Kindle was a success. Both the e-book publishing and cloud computing (AWS) sectors are highly regulated in China and Amazon’s efforts to replicate its U.S. business in China faced big challenges.

Teaching objectives

Help students better understand the tension between standardization/globalization and localization strategies of multinational corporations. Inspire students to think deeply about the challenges of doing business in emerging markets with uncertain regulations. Increase students’ ability to analyze strategies of new business models in the Internet economy related to e-commerce, e-publishing, and cloud computing.

Main themes covered

This case documents Amazon China’s evolving business practices, including its entry mode choices, competition and marketing strategies, business model transformations, conflicts between U.S. headquarters and local entities, roles of local and expatriate managers, and the challenges of dealing with uncertain regulations in an emerging market.

Concepts and theories related to the case

• Standardization vs. localization
• Internationalization strategies and entry modes
• Competitive strategy
• Uncertain regulations in emerging markets
• Business diversification
• Relations between headquarters and subsidiaries
• New business models in the internet economy
• The globalization of markets
• International staffing

Additional information

Also available in French.

Teaching notes are available for teachers only. Please contact the HEC Montréal Case Centre.