Amazon (NASDAQ: AMZN) took another step forward in efforts of increasing their global presence this week; this time in the country rated with the heaviest internet usage, China. Confirmed on Wednesday, Amazon has officially signed a deal with officials to allow the e-commerce giant to begin operations within Shanghai’s new free trade zone.
The participants in the deal included regulators from Shanghai’s free trade zone and Amazon as well as Shanghai Information Investment Inc.
About Shanghai Information Investment Inc.
Shanghai Information Investment is a state-owned investment company that was established in September 1997. It is involved in strategic and lending investments that has the approval from the Shanghai Municipal Government to accelerate the construction on Shanghai’s info-port (i.e. cable network, information pipeline, etc…) and improving the informatization of Shanghai’s economy and society.
Possible Future Growth and Difficulties
For Amazon, the e-commerce company has been in operation in China for a decade and with the new partnership solidified, Amazon can now open a new logistics facility in Shanghai as well as launch its new cross-border e-commerce platform. The company will now be able to directly deliver its products to their Chinese customers.
One of the primary intentions for the expansion is that Amazon hopes that the deal will help keep the company competitive against other competitors such as Alibaba, who is currently the largest e-commerce company in China, with a market share of approximately 80% in the region’s online shopping market, and JD.com (NASDAQ: JD).
Thus far, Amazon has not commented on how much the company will spend to expand their operations. The future is also unclear as to how Amazon will perform and how China’s sales will be affected. Stay tuned for future coverage as Amazon’s new business moves forward.