Amazon Web Services has sold some of its physical infrastructure assets in China to its domestic partner Beijing Sinnet, but says it will continue offering cloud services in the country.
The 2 billion yuan (US$301.2 million) transaction was arranged in order to comply with national security laws that prevent non-Chinese companies from owning certain critical infrastructure assets, including those involved with the delivery of cloud services.
Following the law
After some publications reported that AWS was leaving China entirely, the division of Amazon clarified to TechCrunch: “No, AWS did not sell its business in China and remains fully committed to ensuring Chinese customers continue to receive AWS’s industry leading cloud services. Chinese law forbids non-Chinese companies from owning or operating certain technology for the provision of cloud services.
“As a result, in order to comply with Chinese law, AWS sold certain physical infrastructure assets to Sinnet, its longtime Chinese partner and AWS seller-of-record for its AWS China (Beijing) Region. AWS continues to own the intellectual property for AWS Services worldwide. We’re excited about the significant business we have in China and its growth potential over the next number of years.”
Beijing Sinnet Technology Co. told the Wall Street Journal that the asset acquisition was an attempt to “comply with our country’s laws and rules and further improve the security and the service quality of the AWS cloud-computing service operated by the company.”
Amazon was relying on Sinnet’s assets, as well as ChinaNetCenter’s assets, ever since it launched its first data center in China in 2013.
China has long restricted foreign ownership of valuable assets, but this year the country also strengthened its cyber security laws. More than 40 global business groups petitioned Chinese Premier Li Keqiang in August 2015, while in December companies including Microsoft, Intel and IBM have filed objections against changes that could see them forced to hand over proprietary source code.
Chinese legislators also said that businesses transferring over 1,000 gigabytes of data outside of the country would have to undergo yearly security reviews, in language that has been criticized as overly vague and a threat to proprietary data.
Such measures have forced Western cloud providers to find domestic partners - for example, Microsoft Azure and IBM Cloud are offered in partnership with China-based 21Vianet Group.
Tech giant Apple had to turn to Guizhou-Cloud Big Data Industry Co for its first Chinese data center, instead of building and operating the facility itself, as it does in other regions.