Amazon to Purchase Chinese Retailer Joyo.com
Amazon.com agreed to buy Joyo.com which is China’s largest online retailer of books, music and videos. The agreed purchase will be at $75 million for Amazon to enter the world’s second largest populated Internet market.
Amazon will pay $72 million in cash and assume employee stock options to buy Joyo. The purchase, which will give Amazon its sixth international entity, follows suit in China as competitors such as Yahoo, eBay, and Google have been heavily investing in the Chinese market by acquisitions.
“It looks like a way for Amazon, for a relatively cheap price, to get exposure to one of the best growth areas geographically in the next decade,” said Norm Conley, who helps manage $930 million at St. Louis-based J.A. Glynn & Co., including 127,000 Amazon shares. “They’re getting a bigger footprint internationally, and I think that’s the right thing to do.”
Bloomberg News reports:
During the second quarter, sales at sites outside the United States rose 50 per cent to $595-million. They climbed 13 per cent to $792-million in the United States.
The company, which has sites in the United States, Canada, France, Germany, Britain and Japan, said it expects international sales to surpass U.S. revenue in the future.
Amazon stock fell 73 cents to close at $38.63 on the Nasdaq Stock Market. Its shares are down 25 per cent this year.
Joyo.com operates three fulfilment centres in Beijing, Shanghai and Guangzhou that feed 30 delivery centres, Amazon.com spokeswoman Patty Smith said.
She declined to detail four-year-old Joyo’s revenue or number of employees, saying the transaction is expected to close in the third quarter of 2004.
Internet retailers will sell $8.59-billion worth of merchandise in China this year, according to International Data Corp.
That’s less than one-10th of sales in the United States, the world’s largest market.
“I am confident that Amazon.com’s expertise in global e-commerce, in combination with Joyo’s entrepreneurial management team and employees, will bring the development of e-commerce and on-line customer experience in China to a new level,” said Lei Jun, founder and chairman of Joyo.com and president of Kingsoft Holdings Ltd., the largest shareholder of Joyo.com.