In 2009, Jeff Bezos, chief executive of Amazon, told a bewildered audience that he was separating the Kindle hardware business from its online store for e-books. “We will make Kindle books… available on the iPhone, and other mobile devices and other computing devices,” he declared.
What he may not have known then is that just such a business model is probably the only one that’s going to work for Amazon in China. The Kindle virtual bookstore was introduced in the country last December. But the Kindle e-reader still doesn’t have a launch date.
There have been plenty of false dawns for the Kindle’s appearance in the Chinese market. Earlier this month tech blog Huxiu was one of the latest to break the news that the Kindle device would finally go on sale on April 16. But more than a week later, the Kindle is still nowhere to be found.
So what has happened? Amazon China hasn’t so far commented on when the Kindle will finally make its debut. Huxiu says that technologically, Amazon has had a harder time adapting the Kindle for the China market because Chinese characters are a lot more complicated to render than the English alphabet. But the broader speculation is that Amazon is waiting for government approvals to introduce the device and that Bezos will have to wait while the authorities complete a burdensome testing process.
After years of trying to grow in the China market, Amazon should be used to this kind of setback. Eight years after its $74 million acquisition of a local online retailer, the US giant’s market share in China stands at just 2.1%, trailing domestic firms like Taobao and 360buy.com by a huge distance, according to statistics from Analysys, a research firm. Could Kindle change some of that? It doesn’t bode well for Amazon that no Chinese firm has been able to build a profitable business around e-readers. Hanvon Technologies was one of the first to launch an e-reader in the Chinese market (see WiC118). But due to the lack of available content, it has all but disappeared from the market.
For Bambook, a subsidiary of media conglomerate Shanda, the challenge wasn’t a shortage of content. Despite repeatedly cutting prices, Bambook couldn’t compete with other e-reading tablets like Apple’s iPad. Even Kindle, available for sale on Taobao and imported via the grey market, outsold Bambook.
Other analysts say that Amazon’s biggest problem in China isn’t that no one wants a Kindle e-reader but more that few are prepared to pay for online content. The view is that hardly any e-book platforms will be able to survive amid rampant piracy. Even today, e-book sales account for less than 1% of revenues at Chinese publishing houses, says Huxiu.
“People will pay for good quality hardware, but they won’t pay for content,” Shaun Rein, managing director of China Market Research Group, told Bloomberg.
“If I were Amazon I’d be selling the hardware, not the content.”
To entice shoppers, most of the books currently available for download on the Kindle bookstore are priced below Rmb10 ($1.61). Chinese tennis star Li Na’s autobiography is on sale for Rmb6, for instance, while Mao Yushi’s bestseller Where Does Chinese People’s Anxiety Come From? costs just Rmb1. (To get the content, consumers must download reading apps for Apple iPads and iPhones or through Google’s Android software.)
Despite the cut-price market, competition shows signs of heating up further. Last week Dangdang, which has 50% market share in online book retailing, offered almost all of its e-books for free in hope of drumming up interest for its own soon-to-launch e-reader. Its rival 360Buy has followed suit, offering 50,000 e-book titles for nothing.
Meanwhile, Huanqiu.com, the online subsidiary of Global Times, is reporting that Amazon’s Kindle device could be officially launched in China on May 1. But few are holding their breath…
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