Amazon (AMZN) will have to do more and more to justify its share price which is up 80% this year. So, the company’s CEO, Jeff Bezos, is going to rachet up the company’s business in China.
Amazon bought an online sales company, called Joyo, in 2004, and, according to the company, it is its fastest growing unit anywhere in the world.
Joyo has been growing more slowly than its most direct rival Dangdang.com, so Mr. Bezos is taking a page out of his US playbook. Joyo will offer free shipping for all purchases. The move may be costly, but it is likely to help market share.
The Chinese online business to consumer market is still small, accounting for only $133 million in the first quarter. But, China ranks second only to the US in terms of total internet users, so that number is likely to grow.
And, Mr. Bezos needs growth. After its most recent quarter showed that the company could curtail marketing and tech spending and keep revenue moving up, Amazon’s shares rose and are now at a multi-year high.
The company has to keep posting big quarters to support its valution, and so, like many US CEOs before him, Bezos is turning to China.
Douglas A. McIntyre can be reached at [email protected]. He does not own securities in companies that he writesa about.
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