Amazon.com, the world's biggest online retailer, is to buy Chinese rival Joyo.com for about $75 million (€60.6 million) in a deal that will give it a substantial presence in China's growing internet market.
Joyo is one of the biggest corporate presences on the Chinese internet, with a website offering goods ranging from books and cosmetics to DVD box sets featuring late Communist Party patriarch Deng Xiaoping.
With leading local rival Dangdang.com, Joyo dominates online retailing in the Chinese market.
Dangdang claimed last month that Amazon had offered to buy a majority stake in it for more than $150 million, but had been rebuffed because its founders wanted to keep control of the venture. Dangdang is planning to apply for a US share listing in 2005.
Buying a local company will give Amazon, the corporate model for both Joyo and Dangdang, a strong base in a market very different from that of developed countries. In China, service to urban customers still relies heavily on payment on delivery to bicycle couriers.
Under the deal announced yesterday, Amazon will buy 100 per cent of Joyo, which was set up four years ago with the backing of Chinese computer group Lenovo and software company Kingsoft.
Joyo's sales were 130 million Chinese yuan renminbi (12.69 million) in the first half of this year, compared with Rmb160 million for all of 2003, according to Chinese state media. Amazon said it would pay $72 million in cash, with the remaining $3 million accounted for by the assumption of employee stock options.
The acquisition is the latest in a series of moves into China by international internet companies. US auction site Ebay paid $180 million for Chinese counterpart Eachnet in a deal completed in 2003. Yahoo, the US internet portal, has also been active, paying $120 million for Chinese language search developer 3721 Network Software last year and setting up a joint venture online auction website with Sina.com.
Google, the world's most widely used internet search engine, has launched a Chinese language advertising service and taken a stake in Chinese counterpart Baidu.com. Such moves underline the strong interest in China's fast-developing online market. The official China Internet Network Information Centre says that by the end of June the number of internet users in the country was up nearly 28 per cent on a year earlier.
However, some industry figures argue that it will be difficult for US rivals to succeed in the Chinese market. Jack Ma, founder and chief executive of Chinese e-commerce company Alibaba.com, argues that foreign entrants tend to struggle to control costs and adjust to China's rough-and-ready business realities. - (Financial Times Service)
