China gets Amazon Prime to challenge Alibaba, but leaves out digital content

AMAZON has launched its Prime subscription service in China in a bid to outdo local rival Alibaba, but will not be giving Chinese customers access to its online music and video streaming services.

The coveted Amazon Prime service, which is also available in Germany, the U.K. and the U.S., will give customers in China free shipping on orders amounting to over 200 yuan (US$29.50). The subscription, which launched over the weekend, costs 388 yuan (US$57.35) a year.

However, customers won’t be able to watch popular TV shows and films streamed on Prime Video such as Good Girls Revolt, Transparent, The Man in the High Castle, or Mr. Robot.

TechCrunch assumes this is because the company wants to focus on building more traction in China, where less than 1.5 percent of the market belongs to Amazon.

However, Variety thinks this could be because China’s regulatory rules on foreign media and entertainment is extremely strict – even Netflix has admitted it sees no way forward in its attempts to enter the Chinese market any time soon.

SEE ALSO: Netflix CEO Reed Hastings pessimistic about entry to China

A report by management consulting company McKinsey & Company found a rise in demand for cross-border e-commerce among Chinese consumers, thanks to the middle- and upper-middle class sections of society.

Cross-border e-commerce in China amounted to an estimated US$40 billion last year, more than six percent of the country’s total consumer e-commerce. “Chinese middle- and upper-middle class consumers  are looking to trade up to foreign clothing and gadgets not yet available in China,” said the report.

“They like the niche offerings that traditional ‘bricks or clicks’ merchants rarely sell… Shoppers also feel some degree of protection from fake or counterfeit goods that often pass for offshore brands, particularly in second-tier cities and rural areas.”

SEE ALSO: Mobile commerce in APAC is booming, but hindered by poor user experiences

Whatever Amazon’s reasons are for leaving out digital content, the launch of Prime in China is clearly a bid to one-up Alibaba, which has monopoly over the e-commerce market in the region. The American company may just have leverage here as it has quality control regulations that are far more stringent than Alibaba – who, together with JD is notorious for allowing counterfeit goods slip through its fingers.

Packages ordered via Amazon Prime will take approximately five to nine days, and can be delivered to 82 cities across China.

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