Amazon has sold some of its cloud computing infrastructure in China to its local partner in a deal worth $300m, a move it said was necessary in order to comply with the country's tech regulations.
Beijing Sinnet Technology said Tuesday it would buy parts of Amazon's (NASDAQ: AMZN) cloud business in China for up to two billion Chinese yuan ($301 million U.S.), but the USA e-commerce giant said it was not exiting the world's second-largest economy.
In a statement Amazon emphasised that it had not sold its business in China, saying that it "remains fully committed to ensuring Chinese customers continue to receive AWS's industry leading cloud services".
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The e-retailer added that it sold its physical assets of AWS to Sinnet in order to comply with the Chinese law.
One analyst based in Beijing said that the move by Amazon was mostly due to regulatory compliance. AWS runs a separate hardware venture in collaboration with the Ningxia provincial government in China's northwest, according to Reuters. Apple, the American company behind the iPhone juggernaut, has said it will establish a data center in China, for instance.
The company explained: "Chinese law forbids non-Chinese companies from owning or operating certain technology for the provision of cloud services".
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Sinnet and Amazon signed an operation agreement in July 2016, in which Amazon authorized Sinnet to operate Amazon cloud services in the Beijing region.
AWS first launched a China service in 2014, but must operate via local partners to comply with Chinese law, with companies required to store data locally in legislation enacted in June. Foreign firms there have long complained about local restrictions that appeared to favor domestic players. The rule makes it hard to use data globally, greatly complicating operational strategies for many overseas companies, and countries including the US have voiced concerns about the legislation's enforcement.
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