Amazon's AWS business is reportedly pulling out of China

Amazon's AWS business is reportedly pulling out of China

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.

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

"Chinese law forbids non-Chinese companies from owning or operating certain technology for the provision of cloud services", AWS said, according to The Wall Street Journal. Inc (NASDAQ:AMZN) has agreed to sell part of its cloud computing business in China, to Beijing Sinnet Technology, in a deal worth 2bn Yuan or US$301mln.

Amazon is committed to establish in China, and is looking forward for significant business opportunities and growth potential for the next few years.

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"This move is mostly around regulatory compliance", said Charlie Dai, Beijing-based analyst at Forrester Research. AWS is significantly ahead of the competition across the world, but in China it must operate via local partners due to regulation. If the company intends to continue functioning in China, it has to cooperate with local partners, that often have some degree of government oversight, an AWS spokesman explained. But the USA company has to deal with lawsintroduced this year that mandate the storage of data within the country and bolster government control over the movement of information.

Amazon's decision casts a shadow over similar ventures in the country. Microsoft operates its Azure cloud services unit in partnership with China-based 21Vianet Group.

Other legislation sees it work with Sinnet but also ChinaNetCenter, which provide the internet data centre and ISP services to deliver AWS's cloud.

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.