NetEase Kaola, one of China's leading cross-border e-commerce platforms, is looking to merge with U.S. e-commerce giant Amazon in cross-border e-commerce business in China.

The M&A was initiated by NetEase Kaola several months ago, and is likely to be conducted as a stock exchange transaction.

Both NetEase Kaola and Amazon China declined to comment on the speculations. However, in its statement, Amazon China told CGTN Digital that it has long-term strategic plans for the Chinese market.

The two companies signed a deal to combine China cross-border businesses in a stock-for-stock merger in late 2018, but "the negotiation process has been very difficult," China's Caijing Magazine quoted a source close to the matter as saying. 

NetEase Kaola was established by NetEase in 2015, one of China's largest Internet companies. Its main business was cross-border e-commerce until June last year, when its products expanded to include premium Chinese products as well.

Amazon entered the Chinese market in 2004 by merging with China's e-commerce platform Joyo. Amazon China's business currently covers cross-border e-commerce business including overseas purchase and providing the platform for Chinese businesses to open online stores aiming at international buyers, along with selling paper books, e-books and e-reader Kindle, logistics operation business and AWS cloud computing services. 

Cross-border e-commerce users in China reached 88 million in 2018, with total transactions amounting to 1.9 trillion yuan (0.28 trillion U.S. dollars).