Many Chinese cross-border e-commerce companies are planning to reduce their reliance on Amazon in anticipation of increasingly stringent regulations, according to the Shenzhen Cross-Border E-Commerce Association, ifeng.com reported on Thursday.
Since May, Amazon has banned many Chinese merchant accounts, affecting over 50,000 Chinese merchants. More than 100 billion yuan ($15.44 billion) in financial losses is estimated to have incurred. Shenzhen Youkeshu Technology, a major retailer, has seen nearly 340 stores closed and 130 million yuan in funds frozen in one of the most severe cases of Amazon’s crackdown on domestic sellers.
Amazon said that the primary reasons for the ban were “improper use of review function,” “asking for false reviews from consumers,” “manipulating reviews using gift cards” and other irregularities. The American platform said in a June statement that “it is necessary to protect consumers’ rights and interests by removing third-party merchants who manipulate users’ reviews.”
“Amazon is unlikely to reduce its crackdown on inauthentic paid reviews, forcing Chinese cross-border e-commerce merchants to look for other platforms such as Alibaba AliExpress and eBay,” said Wang Xin, executive chairman of Shenzhen Cross-Border E-Commerce Association.
China’s international e-commerce businesses attract a sizeable force of consumers for Amazon. According to a report released by consulting firm Marketplace Pulse, Chinese merchants accounted for 75% of new merchants on the Amazon platform in January. This year, the proportion of Chinese merchants on Amazon’s US website increased from 28% in 2019 to 63%.
While attracting a large number of consumers, China’s cross-border e-commerce companies also bring some gray area practices including paid reviews and click farming. According to industry insiders, it is common to obtain favorable reviews by giving discount cards or gifts to buyers among Chinese merchants.