Amazon announced last week that it will expand into China’s Shanghai free trade zone in order to take advantage of the region’s more relaxed trade regulations, which will allow the e-commerce giant to sell a broader selection of products in the country.
The decision to move into Shanghai indicates that Amazon not only wants to remain in China, but also hopes to increase its e-commerce customer base there—even in a market controlled by Internet giant Alibaba Group Holding, and Beijing-based online retailer, J.D.com.
Reuters reported that Amazon signed a memorandum of cooperation to give Chinese consumers access to its products from its global supply chain, and to help small to medium-sized Chinese companies to export their products to other countries.
Diego Piacentini, senior vice president of international consumer business at Amazon, said, “I look forward to working with our Shanghai partners to realize the incredible opportunity of developing the best cross-border shopping experience possible for not only customers in China but also around the world and establishing Shanghai as a recognized international cross-border e-commerce center.”
Shanghai’s free trade zone was approved in August 2013. It has been praised as one of the country’s biggest reforms in years, however, a cloud of mystery surrounds the policy’s details. Reuters reported that foreign banks, including Citigroup and HSBC Holdings have set up branches in the zone, but foreign companies have been slow to follow due to lack of clarity of what will and not be allowed to be sold in the zone.