Foreign companies that aspire to do business in China face a host of challenges. Yahoo’s exit from China and Microsoft Corp’s decision to shut down LinkedIn shows how tough the business environment and regulatory requirements are in the country.
However, Amazon has managed to quietly boost its business in China. According to an investigation by Reuters, the company’s success in the country has largely to do with how it cooperated with the Chinese Communist Party.
About two years back, Amazon received an order from Beijing while promoting a series of President Xi Jinping’s speeches and writings on its Chinese website.
According to two people aware of the incident, Beijing instructed Amazon to block all customer reviews and ratings. One of the individuals said that the decree was initiated after a negative rating of Xi’s book. “I think the issue was anything under five stars,” another person said. Five stars is the highest rating on Amazon. The company complied with the order. Now on Amazon.cn, there are zero ratings and reviews for the government-published book and comments are disabled.
Back in 2018, Amazon described some of the “Core Issues” it faced in China in an internal briefing document. “Ideological control and propaganda is the core of the toolkit for the communist party to achieve and maintain its success… We are not making judgment on whether it is right or wrong,” the document seen by Reuters states.
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The briefing document along with interviews carried out by the media outlet point to Amazon’s China operation prospering by helping the CCP fulfill its interests.
Amazon collaborated with a section of China’s propaganda outfit to develop a selling portal on the company’s U.S. site, Amazon.com—a project dubbed as China Books. Subsequently, China Books offered more than 90,000 books for sale but didn’t generate much revenue.
However, Amazon saw the venture as a gateway to secure support in China as it built its e-commerce, cloud-computing, and Kindle electronic-book device businesses. “Amazon.com/China books project has also gained wide recognition among Chinese regulators,” the document states.
Most of the books under the China Books offering are apolitical, like cookbooks, children’s bedtime stories, and Chinese language textbooks. But there are also some titles that embellish the image of China’s Communist Party.
An example is “Incredible Xinjiang: Stories of Passion and Heritage” which raves about life in Xinjiang, where the UN claims that more than one million Uyghur people were reportedly sent to internment camps. The book however insists that ethnicity is not a problem there, repeating Beijing’s message that minorities have not been subjected to abuse.
Amazon justifies the program as being perfectly legal. The company “complies with all applicable laws and regulations, wherever we operate, and China is no exception… As a bookseller, we believe that providing access to the written word and diverse perspectives is important. That includes books that some may find objectionable,” Amazon told Reuters.
China International Book Trading Corp (CIBTC), the state-owned firm that collaborates with Amazon on China books, told the media outlet that the project is a “commercial relationship between two enterprises.” China’s National Press and Publication Administration (NPPA), the state broadcasting division with which Amazon entered into a partnership, refused to comment on the matter.
One former Amazon executive who worked in China said that the China Books project was a solution suggested by the company’s public-policy team “to get what we wanted on Kindle and other things… It was a wink and a nod.”
In Oct. 2012, China Books was conferred with the title “a key national culture export” by Chinese government bodies. Two months later, Amazon started selling Kindle devices and established its ebook business in the country. By the end of 2017, China became the largest market for Kindle, accounting for over 40 percent of its global device sales volume.
By introducing Amazon Web Services (AWS), the company increased its presence in China in 2013. However, things became difficult for AWS when China called for cloud providers to hold a new license that could be secured only by Chinese-owned firms.
In order to continue its operations, Amazon made an unexpected move by passing its cloud technology to local companies. Since then, AWS’s business has flourished as it managed to attract key customers in China. A report by analysis firm iResearch in China reveals that AWS is one of the largest providers to Chinese firms worldwide.