Did Amazon Succeed in China?

Amazon succeeded in China up to some extent because they entered china when GDP its was growing at a rate of 10% each year. Amazon’s entry timing in China was when this country was on the verge of its growing stage. Horizontal integration was used by Amazon in which they acquired Joyo.com, which was the largest online retailer of books, music, and videos in China. Amazon acquired this firm because Joyo.com was an established firm in China and this firm had a 5.2 million registered users. This gave Amazon an initial head start for penetrating the Chinese market and by taking the advantage of the economies of scale of Joyo.com, Amazon with a new management team increased its sales by increasing its product offering.

Learnings of Amazon

Amazon learnt about the following key concepts of management after operating in China

• Global Management: In this, they learnt about the utilization of the available resources to generate a desired level of output.

• They also learnt about the way in globalization can be a power seeking tool that is generally pivoted by advanced economies that enabled free trade under which the relocation of products or service activities were done to those places which had richer resources and lower labour costs.

• They also learnt about the different factors affecting the international Companies. Those two factors are the pressure of global integration and pressure of local responsiveness. To overcome these pressures Amazon had acquired Joyo.com in China.

• Amazon also inculcated business level strategies such as mass customization, therefore, Amazon adapted to the local products, but on the other hand, they maintained global integration to realize cost benefit.

Amazon also learnt to handle deliveries in-house by hiring employees to transport the merchandise the “last mile” to the customer.