Amazon's new Chinese Kindle store is reportedly being investigated by Chinese authorities over charges that the store does not have a license to sell e-books in the country.
China's GAAP (General Administration of Press and Publication) agency requires that digital publishers operating in China must receive at least one of four licenses to publish, copy, distribute, or import ebooks, according to blog site MIC Gadget.
But Amazon allegedly did not obtain any of the required licenses. Instead, the company reportedly borrowed a license from one of its partners, which is against the law in China. Amazon did apply for a business license to run the store, MIC Gadget said, but that process is likely to take a long time to be approved.
In the meantime, Amazon faces stiff competition in the Chinese e-book market from such established vendors as Dangdang, 360buy, Hanwang, and Shanda, all of whom carry more e-books and have already built up their own loyal customers.
The retail giant kicked off the online Kindle store for China last week, serving up Chinese language e-books. The store is seen as the first step toward introducing Kindle devices into the Chinese market.
In June, four Kindle devices received regulatory approval from the State Radio Regulation of China, according to Reuters. Amazon's former China chief told Reuters this year that the company hopes to bring the Kindle to China within the next two years.
CNET contacted Amazon for comment and will update the story if we receive any information.