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November 14, 2017

AWS sells China cloud assets – doesn’t sell cloud business

China remains a big market for AWS to grow into, but it's not alone.

By James Nunns

Amazon Web Services is not calling time on its cloud business in China, after reports suggested that the company had sold its assets in the country for $301 million.

Amazon’s Chinese partner, Beijing Sinnet, is said to have purchased the company’s web services business, but the cloud computing giant has said that it did not sell its business and remains, “fully committed to ensuring Chinese customers continue to receive AWS’s industry leading cloud services,” said an AWS spokesperson.

The full statement from the company says: “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.

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“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.”

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Had the company decided to back away from the Chinese market it would have been a strange move, given that the market could be worth a pretty penny to the cloud giant.

IBM, Microsoft, Google and others have all been looking to make inroads into the Chinese market but have come up against strict regulatory requirements and home-grown competition with the likes of Alibaba accounting for over 40% of the IaaS public cloud market share in 2016, according to IDC.

China Telecom holds 8.51% of the market, Tencent Cloud 7.34%, and Ksyun 6.02%, the remaining 37.46% is divided up between Microsoft Azure, Amazon Web Services, UCloud, Qing Cloud, Huawei Cloud, Wo Cloud, and more.

There’s plenty of interest in the Chinese cloud market from the big Western players, but appeasing the Chinese regulators has been filled with challenges that all are looking to overcome.

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