Regulatory issues in India and China could cause Amazon to withdraw

Two of the most tantalising markets in the world for ecommerce are India and China. They are developing at a real pace and they are huge, comprising around a third of the human population.

But red tape and legislation are hampering Amazon’s development in India and China. The company has said in a filing to the US Securities and Exchange Commission (SEC): “There are substantial uncertainties on the interpretation of China and India’s laws, and is possible the government will take a view contrary to ours. Our Chinese and Indian businesses and operations may be unable to continue to operate if we or our affiliates are unable to access sufficient funding or if China enforces contractual relationships with respect to the management and control of such businesses.”

Amazon noted that one particular problem is that in India the government restricts ownership or control of Indian companies by foreign entities involved in online multi-brand retail trading activities: “For www.amazon.in, we provide certain marketing tools and logistics services to third-party sellers to enable them to sell online and deliver to customers. Though we believe these structures and activities comply with existing laws, they involve unique risks.”

It’s difficult to foresee a situation where Amazon ditches its enterprises in India and China but it seems that onerous rules are hampering their efforts.