Amazon's Bezos to visit 'loss-making' unit, reports claim

Updated: Amazon CEO Jeff Bezos will visit Chinese subsidiary, Joyo.com, which is said to have lost $13 million last year, Chinese media reported today.

Amazon paid more than $70 million for Joyo.com in 2004, at which time it was recognized as China's largest online retailer. Local rival Dangdang has since seized the top spot - it now takes 18 percent of China's online retail sales, compared to Joyo's 12 percent, according to research firm, Analysys International.

While Joyo sold $26.1 million worth of products in the last quarter of 2006, Chinabyte reported, the company lost $13 million – in part due to high operating costs and generous executive salaries. Joyo itself does not usually release revenue data publicly, and local media has not named the source of financial data that has been published.

While Joyo initially focused on book, CD and DVD sales, it began selling consumer electronics and other products after the Amazon acquisition provided expansion capital.

“Our acquisition of Joyo.com is a first step in serving the most populous country in the world,” Bezos said in a recent letter to shareholders. “E-commerce in China is still in its early days, and we believe it’s an excellent business opportunity. Shoes, apparel, groceries: these are big segments where we have the right skills to invent and grow large-scale, high-return businesses that genuinely improve customer experience.”

Chinese media named different sources for their claims that Bezos will visit Joyo, with some citing a Joyo spokesman, and others quoting unamed 'reliable' sources.

Bezos' visit, which is expected to take place next month, will be his first trip to Joyo since Amazon's acquisition of the company in 2004, reports said.

Some local pundits have speculated that Amazon may be looking at another Chinese e-commerce acquisition.

Update June 5: After arriving in Beijing this week, Amazon CEO Jeff Bezos said that Amazon will pump additional funds into Joyo, giving it sole ownership. The Chinese company will be renamed Joyo/Amazon.

“We at Amazon are contributing our extensive technology and expertise to make Joyo the very best in the world at serving customers,” said Bezos in a press release, “We are very proud to be associated with them.”

“It has been very gratifying to have such a strong partnership with Amazon,” added Joyo's president, Hanhua Wang. “By applying Amazon’s technology and experience to the Chinese market, we’ve been able to make significant improvements across all areas of our web site – from fulfillment to selection to pricing and customer service. We never forget that everything we do starts with the customer, and we look forward to serving our customers even better in the future.”