Amazon Web Services Expands in China

Amazon.com Inc. announced on Tuesday that it was expanding its cloud computing business in China with a new local partner, aiming to win share in an increasingly crowded highly regulated market.

Amazon Web Services has opened its second region in China with a local partner, Ningxia Western Cloud Data Technology. The launch comes just one month after Amazon denied reports that its AWS is leaving China, but said the company sold “certain physical infrastructure assets” to Internet services company Beijing Sinnet, which operates its first region in the country, in order to comply with regulations.

Amazon Web Services will start offering customer services based out of the northern Chinese city of Ningxia in partnership with Ningxia.

“AWS has formed a strategic technology collaboration with NWCD, which operates and provides services from the AWS China Ningxia Region, in full compliance with Chinese regulations,” Amazon said in a statement.

The move comes a month after AWS said that it will sell the hardware assets of its Beijing-registered cloud unit for up to 2 billion yuan ($302.06 million) to its partner, Beijing Sinnet Technology Co. Ltd. to comply with new regulations.

China launched strict new regulations in June that require foreign firms to store data locally and outsource hardware elements to local partners.

Cloud services have become a crowded and competitive field in China in recent years, with domestic companies, including Alibaba, opening dozens of new data centers in just the past year.

U.S. companies Amazon, Apple, and Microsoft must jump over hurdles to compete, facing new surveillance measures by China and increasing scrutiny of cross-border data transfers.

Like other foreign tech companies Amazon must follow increasingly strict government regulations in order to stay in China, where it began operations in 2014. These include a new set of cybersecurity laws that took effect in June, apparently to fight cyberterrorism and hacking.

In fact, however, the new laws mean China’s central government now has more direct control over the operations of Internet companies. For example,it requires data localization for “critical information infrastructure operators.” While the definition of “infrastructure operators” is vague, it means many tech companies must now store data within China’s borders.

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