For Jeff Bezos and his Amazon empire, China was supposed to be a gold mine he could enter and explore.
The US giant arrived in China in 2004 after buying the local online bookseller Joyo for $110 million, and rebranded the website to Amazon China as a comprehensive e-commerce platform in 2011.
But in 2019, a year when China made a new record of $2.3 trillion in online sales with over 900 million domestic shoppers, Amazon announced it would shut down its domestic businesses and focus on cross-border sales for Chinese customers instead.
The New York Times reported that despite strong online shopping interest domestically, China contributed less than 6 per cent of Amazon’s global sales that year.
And it was not just the e-commerce market where Amazon failed to reach its lofty goals in China, but also the multi-billion-dollar ebook market — founded, revolutionised and led by Amazon itself.
In May, Airbnb’s co-founder and China chair, Nathan Biecharczyk, told Chinese consumers on WeChat that the company would shut down its domestic businesses on July 30 and focus on outbound travel from China instead.
As more Western tech brands leave China, many are looking to the country’s two new data security laws as the cause of the exodus.
Both implemented in 2021, the country’s data security law and personal information protection law restrict companies and individuals from transferring overseas data that was generated within China.
The laws also require foreign companies to localise data storage and comply with inspections from government regulators.
This week, TikTok admitted Australian user data could be accessed in China, but stated: “We have never provided Australian user data to the Chinese government … and would not provide it if we were asked.”
Mr Tanner said while many Western brands now understood the Chinese market, many struggled to set up a structure that worked in China.
“Chinese companies are incredibly fast at making decisions, incredibly dynamic, and they’re prepared to just throw a whole lot of things at the wall and see what sticks,” he said.
He said many Silicon Valley companies shared similar mindsets, but as decision-makers were not based in China, it took them longer to respond to the Chinese market, even if they had a local branch office.