Amazon buys into Chinese market

Web retailer leaps into China with a $75 million buyout of the country's largest online bookseller.

Matt Hines
Matt Hines Staff Writer, CNET News.com
Matt Hines
covers business software, with a particular focus on enterprise applications.
2 min read
Amazon.com reported on Thursday that it has purchased Joyo.com, a Web retailer operating in China, for about $75 million in cash and stock.

Joyo, which is headquartered in the British Virgin Islands, markets the same core items as Amazon--namely books, music and videos. According to Amazon, Joyo is the largest online bookseller in China.

As part of the deal, Amazon also gains possession of several Chinese subsidiaries and affiliates controlled by Joyo.

The acquisition marks Amazon's second entry into the Asia-Pacific region, where it also operates a site serving the Japanese market. Joyo.com's home page China represents the seventh country in which the massive e-tailer does business, with operations also running in the United States, Canada, France, Germany, Japan and the United Kingdom. Company representatives said Joyo, founded in 2000, would continue to operate independently from Amazon's other sites.

"We're happy to be part of one of the world's most dynamic markets," Jeff Bezos, Amazon's chief executive, said in a statement.

Patty Smith, a spokeswoman for Seattle-based Amazon, said the company is already planning ways to expand the Chinese operation but that it also remains mindful of the "unique challenges" of entering one of the world's largest and most complex markets.

Smith said Amazon will use the same template for running the Chinese operation that it has applied in other regions, making sure that it respects local customs and regulations regarding the products it sells in the region. For instance, the company's German site makes certain not to offer certain books banned by the country's government.

Among the other distinctive elements of the Chinese market that Amazon is planning to tackle are the country's lack of major nationwide distributors and consumers' preference for making cash on delivery (COD) payments. Credit cards remain the transaction method favored by most of the company's customers in the United States and elsewhere. However, Smith said Joyo already has a network of distribution partners and pointed out that COD payments are also popular among Amazon's Japanese customers.

Joyo executives assert that the U.S. e-tailer can help their company expand its customer base among China's estimated 80 million Web users.

"Becoming a part of the Amazon family is great news for our customers," Joyo President Lin Shuixing said in a statement.

Amazon said the deal will include a payment of about $72 million in cash, along with roughly $3 million in stock options, and that it expects the transaction to close during the third quarter.