Online retailer Amazon proposes to operate from the Shanghai Free Trade Zone (FTZ) in a bid to boost sales in China's $300bn-plus online shopping market.
Amazon has signed a memorandum of cooperation that will give Chinese customers access to products from its global supply chain and will help small and mid-sized businesses in China export their wares to customers abroad, reports said.
Amazon did not say when it will begin operations in the free trade zone, which enjoys less stringent trade regulations than the rest of China.
The move will help Amazon better compete with Chinese rivals like Alibaba, which handles more e-commerce than Amazon.com and eBay combined, and Beijing-based JD.com, the second-biggest player.
In July, Amazon reported a $126m loss for the second-quarter, a sharp increase from a $7m loss a year earlier, and it warned of further declines in earnings for the third-quarter of 2014.
Amazon had raked in $19.3bn (£11.6bn, €14.5bn) in revenue in the April-June second quarter, a 23% jump, but did not make any money during.
The firm forecast an operating loss of between $410m and $810m for the third-quarter ending in September, again a sharp increase from a loss of $25m a year ago.
China's online retail sales surpassed $300bn in 2013, according to data from Forrester Research, and Chinese e-commerce giant Alibaba dominated 80% of that market.