March 1, 2024

Hi Tec Greens

Technology In Your Hand

China was seen as a gold mine for Western tech corporations however now they’re leaving there empty-handed

China was seen as a gold mine for Western tech corporations however now they’re leaving there empty-handed

For years, the US enterprise neighborhood has fixated on a quote from Jack Welch, the previous CEO of Normal Electrical, on the way forward for China’s market.

“And we mainly turned out to be proper.”

Mr Welch’s promise of seemingly infinite monetary alternatives lured different US corporations to China.

For Jeff Bezos and his Amazon empire, China was alleged to be a gold mine he may enter and discover. 

The US big arrived in China in 2004 after shopping for the native on-line bookseller Joyo for $110 million, and rebranded the web site to Amazon China as a complete e-commerce platform in 2011.

However in 2019, a yr when China made a brand new report of $2.3 trillion in on-line gross sales with over 900 million home consumers, Amazon introduced it might shut down its home companies and concentrate on cross-border gross sales for Chinese language prospects as an alternative.

The New York Occasions reported that regardless of sturdy on-line purchasing curiosity domestically, China contributed lower than 6 per cent of Amazon’s international gross sales that yr.

And it was not simply the e-commerce market the place Amazon failed to achieve its lofty targets in China, but in addition the multi-billion-dollar e book market — based, revolutionised and led by Amazon itself.

Kindle declares it’s leaving China

Amazon’s Kindle launched in China in 2013, with its iconic e-ink gadget and digital cabinets stacked with hundreds of thousands of e-books. It instantly attracted Chinese language shoppers who nonetheless relied on heavy paperbacks on the time.

China was seen as a gold mine for Western tech corporations however now they’re leaving there empty-handed
Amazon’s Kindle had revolutionised China’s e book market, attracting hundreds of thousands of Chinese language readers to digital studying. (Reuters: Kim White)

It additionally stimulated a steady increase in the e book market in China, with Chinese language state media reporting Amazon occupied 65 per cent of the market share in 2019.

In 2021, Chinese language authorities information confirmed the e-reading sector had gained $9 billion in income, a 20 per cent enhance on the earlier yr.

Over 506 million Chinese language customers had been reported to have accessed ebooks final yr, with every individual studying a mean of 11.58 digital titles.

It subsequently got here as a shock to many when Amazon introduced final month it might shut down its ebookstore in China subsequent yr. 

“We stay dedicated to our prospects in China,” a spokesperson informed the ABC.

“As a world enterprise, we periodically consider our choices and make changes, wherever we function.

However Amazon just isn’t the one US tech big trying to withdraw from China.

New wave of Western tech manufacturers leaving China 

In Could, Airbnb’s co-founder and China chair, Nathan Biecharczyk, informed Chinese language shoppers on WeChat that the corporate would shut down its home companies on July 30 and concentrate on outbound journey from China as an alternative.

This implies the corporate will take away 150,000 listings in China, a market as soon as seen by Mr Biecharczyk as on observe to turn out to be Airbnb’s largest by 2020.

A logo of Airbnb
Airbnb has additionally introduced it’s withdrawing its home journey companies from China. (Reuters: Dado Ruvic)

The ABC has reached out to Airbnb for remark.

Kindle and Airbnb be a part of a rising listing of US tech manufacturers, together with Yahoo and Microsoft’s LinkedIn, which have pulled their companies from China lately. Google exited the nation in 2010. 

Even US giants exterior the tech sphere are rethinking their digital merchandise in China.

In June, attire multinational model Nike introduced Chinese language shoppers would lose entry to its Runner Membership app, which allowed customers to trace their train actions and share the info with their buddies.

The corporate informed CNN it might nonetheless put money into creating digital platforms in China, and would roll out a “localised” platform for Chinese language runners sooner or later.

Tech corporations pressured by China’s tightening laws

As extra Western tech manufacturers go away China, many need to the nation’s two new information safety legal guidelines as the reason for the exodus.

Xi Jinping on the screen
Observers have pointed to tightening Chinese language laws as one of many causes for overseas tech corporations’ exodus. (Reuters: Aly Track )

Each applied in 2021, the nation’s information safety regulation and private data safety regulation limit corporations and people from transferring abroad information that was generated inside China. 

The legal guidelines additionally require overseas corporations to localise information storage and adjust to inspections from authorities regulators.

Which means China might be able to entry consumer information by Chinese language-owned social media corporations similar to TikTok.

This week, TikTok admitted Australian consumer information may very well be accessed in China, however acknowledged: “We’ve by no means supplied Australian consumer information to the Chinese language authorities … and wouldn’t present it if we had been requested.”