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Amazon to launch in Shanghai free-trade zone

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Amazon lost $600 million in China last year, according to analyst Aram Rubinson.AFP--Getty Images

Amazon.com Inc (AMZN) is to launch operations in the new free-trade zone in Shanghai in its efforts to catch up with local e-commerce players, according to media reports.

“We’re going to have lower shipping charges, faster delivery coming into the free-trade zone, so there are going to be many benefits,” the Financial Times quoted Diego Piacentini, vice-president of international consumer business, as telling Chinese television on Wednesday.

Amazon’s market position in China is nowhere near the dominance it enjoys in the e-commerce markets in the U.S. and Europe, thanks to the presence of local giants Alibaba (mainly through its TMall portal) and JD.Com (JD). Investment in trying to close the gap with local rivals was one of the reasons behind the company’s $126 million loss in the second-quarter.

According to data from iresearchchina.com, Amazon has barely 2% of a B2C market that was worth some $75 billion in the first quarter of the year alone.

Amzaon’s senior vice president for International Consumer Business Diego Piacenti told Xinhua news that “Amazon must seize this strategic development opportunity” in the Free Trade Zone, which was set up last year to mainly to provide companies with an opportunity to trade in mainland China under a less onerous regime of capital controls. Although many banks and Microsoft Inc. (MSFT) have registered a presence there, it has not yet had a visible effect on stimulating the economy.

The Wall Street Journal cited a statement from the Shanghai municipal government as saying that Amazon would open a logistics warehouse to help exports of goods from Chinese companies.

Amazon’s press department didn’t immediately respond to requests for confirmation and further information.

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