The list of US tech companies pulling out of China is remarkable

Text size

Amazon.co.uk

last week said so will shut down its Kindle ebook service in Chinathe latest major American company to pull out of the turbulent and competitive Chinese market.

The list of US tech companies that have partially or completely abandoned their efforts in China is notable for how many have found the losing market, but also for how successful most are in other markets.

“Due to its size, China is perhaps the most fiercely competitive Internet market in the world, and almost all Western digital companies have struggled to compete with local companies,” said Feng Li, chairman of the information management at Bayes Business School, City, University. of London, says Barrons. “Cultural differences and deteriorating US-China relations have further complicated matters.”

Airbnb

(ticker: ABNB) is shutting down its homestay services in China, citing the pandemic and local competitors, many of which have longer histories and bigger footprints in the country. On Friday, he said he was preparing to help his hosts migrate to such competitors, such as

Meituan

(3690.Hong Kong) and

Alibaba Holding Group

(BABA).

Yahoo, one of China’s first big tech entrants, shut down its remaining presence in the country in November. “In recognition of the increasingly difficult business and legal environment in China, Yahoo’s suite of services will no longer be accessible from mainland China beginning November 1,” the company said in a statement. In October,

Microsoft
it is

(MSFT) LinkedIn has announced plans to shut down its social media platform in China.

Amazon

(AMZN) said in a statement that “as a global company, we periodically evaluate our offerings and make adjustments, wherever we operate.” He was not backing down due to government pressure or censorship, a spokesman told Reuters. Still, the company complied with Beijing’s ban on content deemed sensitive and faced a host of local competitors in the e-reader and e-book markets, many of which have lower prices.

Tencent Holdings

(700.Hong Kong),

Xiaomi

(1810.Hong Kong), Huawei, and state-owned

iFlytek

(002230.China) are just a few popular Chinese brands that Amazon faced. The ebook’s withdrawal follows Amazon’s 2019 closure of its e-commerce store in China, after it failed to gain significant market share from Alibaba and

JD.com

(JD).

Amazon, LinkedIn and Yahoo had some of the longest tenures of now-defunct US companies. Google’s search engine presence from 2006 to 2010 in China ended acrimoniously after censorship disputes and hacking allegations that Google said put Chinese citizens at risk.

“We know it was very organized and that the attack came from China and that political dissidents and people interested in human rights in China were clearly targeted,” David Drummond said at the time. Senior Vice President and Chief Legal Officer.

While almost all companies leaving China have noted the fierce competition, experts say there is greater strength at play.

“The specifics are different for each individual business failure in China, but the general pattern is easy to explain,” said J. Stewart Black, professor at INSEAD business school and co-author of the forthcoming book, “ Enterprise China: Adopting a Competitive Strategy for Business Success.”

He said Barrons that “China has an explicit policy and goal of reducing external dependence through import substitution by 70% in most industries by 2025. This was one of the main explicit goals of Made in China 2025”.

Businesses dealing with less sensitive information moved in and out of China in the blink of an eye, including

Macy’s

(M),

Home deposit

(HD),

best buy

(ABY), and

eBay

(EBAY). Forever 21 is on its third attempt to conquer the Chinese market.

But Black said the political environment, especially for tech companies, is unprecedented in its difficulty. “Consider that 150,000 enterprises in China are state-owned. Consider further that these companies are some of the largest in China and indeed the world and account for around 30% of China’s GDP,” he said. China ‘has the ability and willingness to exercise control, or at least significant influence, over large companies that it does not own’, as evidenced by Alibaba’s withdrawal from the IPO. AntFinancial.

“This is a magnitude of state influence and control that we simply haven’t seen in other major economies,” he said.