Why did Amazon expand to China? What entry mode did it use?

IN MANAGEMENT March 2018 HEC204 Competing with Dragons: Amazon in China Case prepared by Pengfei LI! Yahoo! arrived in China in 1999, but departed in 2005 eBay entered China in 2003, but exited in 2012 Google tackled China in 2005, but retreated in 2010 Uber headed to China in 2013, but was driven out in 2016 In 2004, Amazon arrived in China as a behemoth, but twelve years later it was still just a small fry, holding no more than 1.6% of the world's largest e-commerce business in terms of market share. Should Amazon abandon China as its American high-tech peers had done, or should it stay and fight? How had it lost this important battle, and how could it regain its market share? In April 2016, Elaine Chang, Amazon China's newly appointed president, needed to quickly find answers to these questions. Based in Seattle, Washington, Amazon was one of the world's largest and most innovative firms. In 2016, it had 341,400 employees and net sales of $136 billion. (Exhibit 1 shows Amazon's financials from 2000 to 2016.) Founded in 1994 by Jeffrey Bezos as an online bookstore, the company quickly grew into a giant online marketplace that revolutionized the retail industry. Since 2007, Amazon has been actively involved in the hardware business with the launch of its kindle e-reader, Fire tablet, Fire TV, and Echo hands-free speaker. It has also become a leader in the cloud-computing revolution with its Amazon Web Services (AWS) unit. With its leading technologies and size advantage, Amazon dominates the e-commerce industry in many countries, yet it has failed to do so in China. When it entered China in 2004, e-commerce was an emerging phenomenon there, its local rivals, just small, young players. Amazon's first move was to acquire a major local online bookseller (Joyo), transferring the company's advanced technologies and the business practices that had proven successful in the U.S. to its new subsidiary. Amazon