Both Alibaba (NYSE: BABA) and Amazon (NASDAQ: AMZN) have had new developments emerge this week which signal increased competition in China’s e-commerce industry, despite the looming threat of a trade war by President Trump.
The listing could result in a massive $20 billion in capital being raised by the third quarter of 2019 – marking the world’s largest follow-on share sale in the last seven years.
The source reports that Alibaba will use the $20 billion in capital to fund technology investment. Given the economic uncertainty of US-Chinese relations, Alibaba desperately needs to pursue technology to keep pace with its competitor Amazon across the sea.
Meanwhile, Amazon has quietly been ramping up its business and hiring in China, despite previously admitting defeat in the Asiatic markets.
In April, the online store giant announced that it would be ending its domestic e-commerce marketplace in China, leading most to believe that Amazon was giving up on Eastern Asia.
According to Bakertown Consulting founder Stephen Rector:
“Amazon was never able to get into marketplace in a strong way. Based on the dominance that they have in other parts of the globe, it’s almost better to walk away from a place where your market share is so low.”
However, a new report by Yahoo Finance shows that Amazon has boosted job postings across several regions of China, giving an indication of expansion.
While other US-based companies are wary of China in anticipation of deteriorating trade relations, Amazon may be moving in the opposite direction. Despite President Trump initiating a new tariff on Chinese goods starting in July, Amazon has increased job postings in the country by 30 percent.
Amazon has reiterated a commitment to operating business in China, even after shuttering its domestic marketplace.
A spokesperson for the company explained:
“Amazon’s commitment to China remains strong–we have built a solid foundation here in a number of successful businesses and will continue to invest and grow in China.”
With the rise of Alibaba, Amazon is anticipating a clash over competition for global e-commerce dominance.
Alibaba has been on a tear since its record-setting $25 billion IPO five years ago. However, Amazon is quickly becoming a world power, and it already holds a near-monopoly over US customers.
A survey by NPR in 2018 found that roughly two-thirds of Americans do their online shopping through Amazon, and the country could continue to extend its influence across the Pacific.
This article was edited by Josiah Wilmoth.