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The world’s largest online retailer, Amazon.com Inc. (AMZN - Analyst Report) recently announced the launch of its Kindle ebook store in China, enabling Chinese customers to read ebooks using Android and iOS apps.
While the company is not selling Kindle e-readers in China yet, Chinese customers can buy Kindles from other countries. Thus, this launch will not only provide Chinese customers with a wide selection of books, but will help Amazon tap a promising market.
The China Kindle Store will offer 24,479 e-books, including new releases and best sellers from a number of Chinese authors. The store will have its usual mix of free public domain titles along with books priced in the range of few yuan (less than a U.S. dollar) to around $7.
Amazon’s Kindle devices are expected to hit China soon as they have already been authorized by the country’s radio regulator. However, the company has not yet disclosed any plans about when the Kindle device would be sold in China.
In recent months, Amazon has been aggressively moving into international e-book markets. Apple Inc. (AAPL - Analyst Report) and Kobo are also making significant effortsto enter important overseas markets.
Earlier this month, Amazon launched its Kindle Store in Brazil and also announced the upcoming commercial release of the Kindle e-reader in the South American country. In late August, Amazon launched a Kindle ebook store in India. It also opened Appstores in certain parts of Europe, including the U.K., Germany, France, Italy and Spain, along with the introduction of the Kindle Fire tablet.
China is estimated to be the second-largest market for e-readers in the world and Amazon has been operating in China for some time and is now entering the ebook market.
Though the Chinese e-reader market is already dominated by local players such as Hanwang Technology’s e-readers and Shanda Cloudary’s Bambook, we believe China’s huge market size, Amazon’s strong reputation and credibility, and the low pricing of the Kindle will attract Chinese book lovers. This will likely boost Amazon’s e-books and other content sales.
There is a good possibility of Amazon capturing a significant share of the Chinese market within the next five years; following which the company is expected to generate an additional several billion dollars a year in revenue.
Amazon is one of the leading players in the extremely fast-growing retail ecommerce market and its strength lies in its huge scale of offerings, its broad reach and platform approach. We believe Amazon’s strong balance sheet helps the company to capitalize on investment opportunities and strategic acquisitions, thereby further improving growth visibility.
However, heavy investments in its Kindle tablet computers, new warehouse and data centers may weigh on its near-term results.
Amazon currently retains a Zacks #3 Rank (Hold). Currently, Amazon’s competitors (whether direct or indirect) are eBay Inc. (EBAY - Analyst Report), which retains a Zacks #2 Rank (Buy), and Barnes & Noble, Inc. (BKS - Snapshot Report) and Google (GOOG - Analyst Report), both carrying a Zacks #3 Rank (Hold).
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