Amazon Sells Portion Of Business For $300 Million Because Of Chinese Law

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According to press reports, Amazon is only selling "certain physical assets" and the deal will allow Sinnet to better comply with Chinese laws.

Amazon will still possess the intellectual property for its AWS services. Microsoft already operates its Azure cloud service in China with the China-based company 21Vianet Group.

Beijing Sinnet Technology said that it would buy a part of Amazon's cloud computing business in China for up to 2 billion Chinese yuan ($301 million) on November 14.

Amazon is committed to establish in China, and is looking forward for significant business opportunities and growth potential for the next few years. Due to compliance issues, Amazon began operating AWS services in 2016 through its partner Sinnet. In China, regulations require Amazon to operate via a local partner before offering the services to customers.

"This move is mostly around regulatory compliance", said Charlie Dai, Beijing-based analyst at Forrester Research. AWS runs a separate hardware venture in collaboration with the Ningxia provincial government in China's northwest, according to Reuters. Companies targeted by the regulations are required to carry out a security self-assessment or obtain approval from the relevant regulator before transferring the controlled data overseas. Sinnet asked its customers earlier this year to stop using virtual private networks, which are able to circumvent China's Great Firewall.

Amazon's decision casts a shadow over similar ventures in the country.

More recently, telecoms equipment giant Huawei announced plans to take on AWS and Alibaba with its own cloud platform.

"We expect other foreign players, such as Oracle and IBM, will also ensure regulatory compliance as long as they want to provide public cloud services in China", said Dai.

Whereas AWS is the public cloud leader globally, it has struggled to crack a Chinese market that has traditionally been served by its own tech firms.

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