For years, the US business community has fixated on a quote from Jack Welch, the former CEO of General Electric, on the future of China's market.
"And we basically turned out to be right."
Mr Welch's promise of seemingly endless financial opportunities lured other US companies to China.
For Jeff Bezos and his Amazon empire, China was supposed to be a gold mine he could enter and explore.
The US giant arrived in China in 2004 after buying the local online bookseller Joyo for $110 million, and rebranded the website to Amazon China as a comprehensive e-commerce platform in 2011.
But in 2019, a year when China made a new record of $2.3 trillion in online sales with over 900 million domestic shoppers, Amazon announced it would shut down its domestic businesses and focus on cross-border sales for Chinese customers instead.
The New York Times reported that despite strong online shopping interest domestically, China contributed less than 6 per cent of Amazon's global sales that year.
And it was not just the e-commerce market where Amazon failed to reach its lofty goals in China, but also the multi-billion-dollar ebook market — founded, revolutionised and led by Amazon itself.
Kindle announces it is leaving China
Amazon's Kindle launched in China in 2013, with its iconic e-ink device and virtual shelves stacked with millions of e-books. It immediately attracted Chinese consumers who still relied on heavy paperbacks at the time.
It also stimulated a continuous boom in the ebook market in China, with Chinese state media reporting Amazon occupied 65 per cent of the market share in 2019.
In 2021, Chinese government data showed the e-reading sector had gained $9 billion in revenue, a 20 per cent increase on the previous year.
Over 506 million Chinese users were reported to have accessed ebooks last year, with each person reading an average of 11.58 digital titles.
It therefore came as a surprise to many when Amazon announced last month it would shut down its ebookstore in China next year.
"We remain committed to our customers in China," a spokesperson told the ABC.
"As a global business, we periodically evaluate our offerings and make adjustments, wherever we operate.
But Amazon is not the only US tech giant looking to withdraw from China.
New wave of Western tech brands leaving China
In May, Airbnb's co-founder and China chair, Nathan Biecharczyk, told Chinese consumers on WeChat that the company would shut down its domestic businesses on July 30 and focus on outbound travel from China instead.
This means the company will remove 150,000 listings in China, a market once seen by Mr Biecharczyk as on track to become Airbnb's largest by 2020.
The ABC has reached out to Airbnb for comment.
Kindle and Airbnb join a growing list of US tech brands, including Yahoo and Microsoft's LinkedIn, which have pulled their services from China in recent years. Google exited the country in 2010.
Even US giants outside the tech sphere are rethinking their digital products in China.
In June, apparel multinational brand Nike announced Chinese consumers would lose access to its Runner Club app, which allowed users to track their exercise activities and share the data with their friends.
The company told CNN it would still invest in developing digital platforms in China, and would roll out a "localised" platform for Chinese runners in the future.
Tech companies pressured by China's tightening regulations
As more Western tech brands leave China, many are looking to the country's two new data security laws as the cause of the exodus.
Both implemented in 2021, the country's data security law and personal information protection law restrict companies and individuals from transferring overseas data that was generated within China.
The laws also require foreign companies to localise data storage and comply with inspections from government regulators.
That means China may be able to access user data through Chinese-owned social media companies such as TikTok.
This week, TikTok admitted Australian user data could be accessed in China, but stated: "We have never provided Australian user data to the Chinese government … and would not provide it if we were asked."
Kendra Schaefer, partner of Beijing-based strategic advisory consultancy Trivium China, said the regulatory tightening efforts had forced some tech companies to give up features that used to be their source of profits.
A report by the US-China Business Council in April also showed 81 per cent of surveyed US companies were concerned about China's data security policies, highlighting the ambiguity in regulations and the inconsistent regulatory enforcement.
Ms Schaefer noted that besides data security laws, many Western tech companies had been subjected to different Chinese regulations tightening over the past few years.
"[For example], Airbnb has been dealing with significant issues, especially in Beijing and Shanghai and major cities, in terms of tough rental regulations," she said.
Amazon has also faced licensing issues over publishing books on its ereaders.
In 2021, a special report by Reuters showed the company aimed to resolve the issue by running its China Books project, which entailed partnering with the CCP's propaganda arm to promote Chinese President Xi Jinping's books.
It was also found to have removed user comments and review functions for books by Mr Xi, after a request from the Chinese government.
Beijing isn't the only one to blame
While Western companies have found regulations to be a barrier to securing China's market, some Chinese consumers tell a different story.
Xiaofeng Luo, a 25-year-old marketing specialist and bookworm from Zhejiang province, said she had read "around 100 books" on her Kindle device when she was 17.
But in the past two years, she has not used the device at all.
"I couldn't find the books I want to read on Kindle. I would get their paperbacks on Amazon, but weirdly there's no Kindle version of them," she said.
Ms Luo's friends recommended she try WeRead, an e-reading platform created by Tencent as a by-product of its social app WeChat.
"They offer many types of books from very good publishers, and they offer a low-price membership for you to access all books," she said.
Ms Luo also enjoyed the social feature of WeRead, which allows users to share their reading lists or discuss content with other users on the platform.
Ms Luo's experience echoes the observations of Mark Tanner, managing director of Shanghai-based marketing consultancy China Skinny.
"There are always really great local, innovative, or really cost-effective ereaders that in the eyes of many Chinese consumers [offer] better value and have really good books available. So there's not really any advantages to buying the Kindle," he said.
Airbnb has also faced challenges from its Chinese rivals, such as Tujia, which boasted 2 million listings of shared accommodation in 2020 — 13 times more than Airbnb.
Ms Schaefer said the lack of uptake in the Chinese market was one of the primary drivers behind Western tech brands' failure in China apart from tightening regulation effects.
"They didn't try to become a Chinese app, and [China has] kind of got this very different user ecosystem that doesn't really conform to international user experience and user expectations," she said.
So why does Silicon Valley still fail to understand the Chinese market, after so many years?
After almost two decades in China, some are still failing
Mr Tanner said while many Western brands now understood the Chinese market, many struggled to set up a structure that worked in China.
"Chinese companies are incredibly fast at making decisions, incredibly dynamic, and they're prepared to just throw a whole lot of things at the wall and see what sticks," he said.
He said many Silicon Valley companies shared similar mindsets, but as decision-makers were not based in China, it took them longer to respond to the Chinese market, even if they had a local branch office.
"And also many of these guys making decisions outside of China haven't been back since early or late 2019, mostly [because of the pandemic], so they're a little bit out of touch," Mr Tanner said.
He also added that compared to other sectors such as health and beauty products, there were "very few successful case studies" of foreign tech brands winning markets in China.
"It's not just a case of showing up and saying you're from Australia [ and then you can gain success], it's more complex, more competitive than it's ever been," Mr Tanner said.
Ms Schaefer said tech companies entering China's market should be prepared for a "different technological ecosystem".
"It's just that different users expect something very different, and what they expect nobody else anywhere expects," she said.
"So you've got to totally localise. You're basically building a second product.
