When internet users in China log on to Amazon, they see a design that largely mirrors the site’s international versions. What they also encounter, unbeknownst to most, is a piece of China’s internet history.
Amazon entered China in 2004 by buying and building upon Joyo.com, one of the earliest ventures founded by Lei Jun. Lei, who had been inspired as a college student after reading about Apple co-founder Steve Jobs, went on to found Xiaomi, which offers iPhone-like smartphones (and much more) and is gearing up for a massive listing in Hong Kong. The Beijing-based company is set to price its IPO today (June 29), with many expecting a valuation of up to $70 billion.
As recounted in Jiang Hongjun’s book Seizing the Opportune Moment (link in Chinese), which tracks the entrepreneur’s career, Lei founded Joyo in 1999 while working at Chinese software maker Kingsoft. Joyo began as a site for downloading software onto desktop computers—this was just as the world was transitioning away from CD-ROMS. Later it added online shopping, tech news, and a publishing arm. Eventually, Lei pared it down to a site that focused on books, music, and movies.
“There was a lot of temptation, a lot of anxiety. We wanted to do this and we wanted to do that,” Lei says in Jiang’s book. “After we had launched all of our ideas within a month, we realized we were wrong, and we quickly shrank back.”
In 2001, Joyo’s sales reached 56 million yuan. By 2003, they hit 150 million yuan. Despite the rapid growth, Joyo faced stiff competition, namely from Beijing-based e-commerce site Dangdang. Both firms were burning cash to attract new users, with steep discounts on the products they sold.
“Amazon’s global e-commerce scale has already reached $3 billion to $4 billion,” Lei said in 2003, according to Jiang’s book. “Joyo’s goal for China is to hit 1 billion yuan, and at the same time we want to become the market leader. With Joyo’s current profits, it might take 10 to 20 years for investors to see returns.”
Bezos and his Amazon team met with Lei and Joyo investors on Valentine’s Day in 2004. Six months later, Amazon formally announced its purchase of Joyo for $75 million.
In Jiang’s book, Lei said the deal felt like selling a daughter, but he viewed it as necessary: “We had no choice but to sell. This would do right by investors and do right by employees.”
Around the time of the deal, Alibaba’s Taobao and JD.com’s e-commerce site launched. Those companies, not Joyo or Dangdang, would go on to become China’s giants in online shopping. Nearly 14 years after it entered the country, Amazon China has only a marginal share of China’s e-commerce market.
While not Lei’s most successful venture, Joyo hinted at what would follow. Since its 2010 launch, Xiaomi has moved beyond selling smartphones and become a sizable retailer in its own right. On its Chinese e-commerce site, the company sells everything from air filters to electric scooters to ballpoint pens.