Amazon’s cloud unit expands in China, with new partner in Ningxia

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BEIJING (Reuters) – Amazon.com Inc said on Tuesday it was expanding its cloud computing business in China with a new local partner, aiming to win share in an increasingly crowded and highly regulated market.

Amazon Web Services (AWS) will start offering customer services based out of the northwestern Chinese region of Ningxia in partnership with local firm Ningxia Western Cloud Data Technology Co Ltd (NWCD), the U.S. firm said.

“AWS has formed a strategic technology collaboration with NWCD, and NWCD 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 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 Group Holding Ltd, opening dozens of new data centers in just the past year.

Chinese firms account for roughly 80 percent of total cloud services revenue in China, according to Synergy Research Group.

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

The infrastructure for the new data centers in Ningxia was built by NWCD affiliates using specifications provided by AWS, an Amazon spokesman told Reuters.

While the AWS services offered in China are similar to services offered elsewhere, they are separated from other regions globally and customers enter agreements with Sinnet and NWCD rather than with AWS, Amazon said.

(This story has been refiled to correct paragraph two to show Ningxia is a region, not a city. Specifies Ningxia is in northwest China.)