As it battles increasing competition from low-cost online retailers Temu and Shein, both of which have their origins in the second-largest economy in the world, Amazon is extending a new offer to sellers situated in China.

Amazon announced plans to construct an "innovation center" close to Shenzhen, which is known as China's Silicon Valley and is a hotspot for technological businesses and cross-border e-commerce.

(Photo : by SEBASTIEN BOZON/AFP via Getty Images)
As it battles increasing competition from low-cost online retailers Temu and Shein, both of which have their origins in the second-largest economy in the world, Amazon is extending a new offer to sellers situated in China.

The announcement was made during a conference that started on Tuesday and extends through Friday. "Promote sellers in the Asia-Pacific region in product launch, brand building, and digitization," according to Amazon.

Additionally, the business is providing access to its end-to-end supply chain service, which made its U.S. debut in September, to Chinese merchants. With the help of this service, retailers may "in one stop" transfer items from foreign factories to Amazon and other channels.

Some of Amazon's senior executives attend the annual conference for sellers in China, which usually draws thousands of merchants from the area.

China's Growing Influence on Amazon

Despite Amazon's withdrawal from the Chinese market, China has emerged as a major destination for companies aiming to promote their goods to Amazon's extensive worldwide clientele. According to Marketplace Pulse, almost half of the top Amazon sellers were headquartered in China at one point.

According to Amazon, the number of Chinese vendors with sales above $10 million climbed by 30% in 2023, while the number of products sold by Chinese sellers on the platform expanded by more than 20% annually.

Meanwhile, Temu, controlled by PDD Holdings, the massive Chinese IT company, is posing fierce competition in the area, and Shein, a Chinese-founded company that relocated its headquarters to Singapore last year.

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Shein's Expanding Marketplace and IPO Plans

Shein, a retailer of fast fashion apparel and accessories, opened a marketplace earlier this year with the goal of carrying a larger selection of goods, including home goods and electronics. In recent months, a few Amazon retailers have started selling on Shein.

Shein quietly filed for an IPO in the United States at the end of November. A listing would increase Shein's appeal both domestically and internationally, but the firm has already come under fire for its alleged use of forced labor in its supply chain, links to China, and environmental effect. According to a prior estimate from CNBC, the company's valuation was $66 billion.

After airing a Super Bowl commercial early this year, Temu, a digital bargain cellar with an assortment of products ranging from inexpensive knockoffs of well-known brands to eccentric trinkets, has gone on a marketing spree.

According to a recent research note by TD Cowen, Temu accounted for 20% to 25% of ad impressions purchased on Google in the fourth quarter, up from "near zero" at the end of 2022. Temu customers use the app for almost twice as long as they do on Amazon and eBay.

Amazon changed its seller fees last week, reducing the commission it charges for apparel under $15 from 17% to 5% in an apparent effort to attract Shein and Temu retailers.

Earlier this month, CEO Josh Silverman said that Temu and Shein are "taking a little bit of share from everyone" during an investor event.

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