Sinnet Technology Co.in Beijing, which is the Chinese partner of Amazon, said in a Monday filing that it would purchase the US company's Amazon Web Services public cloud computing business in China at a price of as much as 2 billion yuan or $301.3 million. 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.
To comply with Chinese legislation, however, Amazon sold certain physical infrastructure to its local partner.
Amazon is committed to establish in China, and is looking forward for significant business opportunities and growth potential for the next few years.
"This move is mostly around regulatory compliance", said Charlie Dai, Beijing-based analyst at Forrester Research.
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In a TechCrunch article it was explained that Chinese law does not allow certain technologies to be owned by non-Chinese companies, so a transaction was required to continue the partnership between the companies in China. He added this move was necessary for AWS to increase its other areas of business within the market.
AWS has another hardware venture with the provincial government in Ningxia located in the northwest region of China.
Amazon's decision casts a shadow over similar ventures in the country. Foreign firms have repeatedly complained about the biased regulations in China that favor the local companies.
Other legislation sees it work with Sinnet but also ChinaNetCenter, which provide the internet data centre and ISP services to deliver AWS's cloud.
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Microsoft, Oracle and IBM did not immediately respond to request for comment on Tuesday.
Amazon controlled over 40 per cent of the global market for public cloud services in 2016, well ahead of Microsoft Corp and Alibaba, according to Gartner estimates.
However, like its peers, Amazon has found it hard making headway in China, which is dominated by local tech giants Alibaba and Tencent Holdings Ltd.
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