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

15 November 2017

Beijing Sinnet Technology Co Ltd, Amazon's China partner, said in a filing late yesterday that it would buy the U.S. firm's Amazon Web Services (AWS) public cloud computing unit in China for up to 2 billion yuan ($301.2 million), according to the report.

Amazon Web Services confirmed in a statement reported by WSJ that this move was meant to meet compliance requirements in China.

Amazon.com Inc. agreed to sell some of its Chinese cloud assets to its local partner but said it's committed to a domestic market for internet-based computing that could be worth $30 billion.

In a statement to TechCrunch, the online retail giant said it is not parting ways with its business in China, and will continue to offer the industry-leading cloud services to its customers in China.

Amazon isn't the only one to make decisions based off a desire to stay in China. It said instead it was selling hardware to comply with laws that forbid ownership or operation of certain types of cloud technology.

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The deal between Amazon and Sinnet is possibly connected with what is called the Great Firewall of China, the government's increasingly vice-like grip over Internet access in the country. The service has outperformed its competitors throughout the world with a market share of over 40% globally in 2016, much more than Microsoft and Alibaba, according to Gartner.

Amazon announced its China AWS region back in December 2013, and noted at the time that, to comply with China's legal and regulatory requirements, it was working with local companies, including Sinnet, who would provide the necessary data centre infrastructure, bandwidth and network capabilities. Foreign firms have repeatedly complained about the biased regulations in China that favor the local companies.

They would go under the strict regulatory scrutiny from the Chinese government.

Big name tech companies in the US often bend over backward to either attempt to penetrate the highly protected Chinese market, or maintain a somewhat established presence.

On Monday, Amazon shares closed up 0.34% at $1,129.17.

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