
Beijing Sinnet says it will buy Amazon Web Services’ China business - Bockit
https://www.wsj.com/articles/amazon-to-sell-its-china-cloud-computing-business-1510628802
======
gkanai
"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. 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."

[https://techcrunch.com/2017/11/13/aws-exits-
china/](https://techcrunch.com/2017/11/13/aws-exits-china/)

~~~
vfulco
The longer the press release and/or the more legalese, the worse the story or
in this case, withdrawal from a previous market. Positive, constructive press
releases are very short by comparison.

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samspenc
Two things I take away from this.

1\. Amazon decided that the risk of doing business in China (handing over
information & know-how to the government, helping it suppress the human rights
of its citizens, etc) was not worth the revenue that it would make.

2\. It sold for $300 million. That means its run-rate was probably only $50
million a year or so annually (or maybe less). That's not very much at all,
given that AWS' annual global business is about $10 billion and rising (so
China's cloud share accounted for less than 0.5% of AWS global cloud
business.)

~~~
propman
Number 1 is especially key, last 2 years US businesses have pulled out of
China a lot because of really really sketch actions by the Chinese government.
Doesn't hurt to use the totalitarian argument either, but mainly they are
losing money. Goldman Sachs, Citigroup sold their stakes last year as well.

China will likely start opening up more because Western companies aren't as
naive anymore and short term profits for long term losses aren't much of an
option anymore now that Chinese companies are well developed in all the tech
and economies of scale.

~~~
forapurpose
> China will likely start opening up more ...

Let's not forget that there is an international trend to close down more (to
use the same metaphor), including the U.S. and U.K. China could follow that
trend too, and certainly the progress of free trade no longer can be assumed.

The President of the U.S. just gave an unprecedented speech at the Asian
summit, criticizing institutions of rules-based, cooperative international
trade expansion, criticizing trade partners, and arguing in favor of every
nation adopting his isolationist, nationalist approach. (China's president
followed with a speech favoring international trade cooperation.)

~~~
Canada
In contrast, look at what these countries do rather than what their leaders
say.

American markets are actually open. Americans can invest their money anywhere.
Foreigners can buy property and own companies with few restrictions.

China discourages imports by punitively taxing them. Chinese face strict
capital controls. Foreigners and their businesses are heavily restricted in
what they can buy and what activities they can engage in.

~~~
walshemj
Really in that case when I see prospectuses for floats in the UK they
explicitly ban Americans (due to silly IRS rules I belive)

The float of the royal mail is one example retail investors in the USA where
locked out

~~~
Canada
That's true, FATCA has created a situation where Americans are effectively
locked out of foreign banks. It sucks, especially for Americans living abroad
and business people trying to establish themselves internationally, however
it's not the same thing as capital controls. Americans can invest anywhere
that will accept their money without their own government shutting them down.

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netguy6
I think WSJ misinterpreted this. Sounds like a bit of an ownership shift, but
Sinnet will still pay AWS to operate the regions.

~~~
mechiland
Yes. You know media, they like big title.

Sinnet only buy the Beijing equipments to make them a national assets for the
regulation compliance. AWS China to open another region very soon in Ningxia,
which not included in the deal.

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kijiki
Does this deal include datacenter/HW designs? Software? Operational practices?

Seems like a pretty massive technology transfer.

~~~
tryingagainbro
Looks like they "bought" it but AMZN will license the technology to them so
they'll still make some money. Apparently China doesn't want big tech to be
non-Chinese in their country and doesn't seem to be hurting. They have their
equivalent of everything

~~~
stuffedBelly
Right. Alibaba Cloud Service can pretty much hold on its own.

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thisisit
> The buyout was an attempt to “comply with our country’s laws and rules and
> further improve the security and the service quality of the AWS cloud-
> computing service operated by the company,” Beijing Sinnet said.

This was long time coming:

[https://www.nytimes.com/2017/08/01/business/amazon-china-
int...](https://www.nytimes.com/2017/08/01/business/amazon-china-internet-
censors-apple.html)

Though I wonder how are the acquiring companies funded? And if China can
continue doing this long term.

~~~
gonyea
Why couldn’t they? No/little international pressure to do otherwise and a
currency printing press to subsidize back room deals.

This is a great strategy for China and it’s utterly insane that we allow this
situation to continue.

~~~
thisisit
> it’s utterly insane that we allow this situation to continue.

That is the point I am trying to make. How long before everyone says this is
insane and tries to start blocking deals?

Though China's inflation due to _currency printing press_ might come home to
roost before that happens.

~~~
coliveira
If giving money for business development ever created inflation, the US would
not have enough machines to cut the zeros from its currency. Please understand
that creating money for productive purposes cannot generate inflation, this is
essentially what banks have been doing since they were ever invented.

~~~
underdown
Adding money to the supply of money causes inflation regardless of the
"productive purpose" for which it is used.

~~~
coliveira
Banks add money to the money supply daily. Money that didn't exist before a
loan is approved suddenly appears out of thin air, due to the fractional
reserve system. Billions of dollars in loans are created every single day in
this way, and even before they are paid, more is created. Where is the
inflation? Instead, we live in a deflationary world. Countries, through their
development banks do exactly the same. No inflation is created because of
this, stop believing in what has been proven untrue.

~~~
wahern
Not necessarily disputing your point, but part of the reason that there's
deflation (or at least lack of inflation) is because banks _aren't_ investing
in production capacity. Corporate debt is at an all time high, yes, but AFAIU
mostly because corporations are swapping current earnings for debt because in
the current environment it's [presumably] marginally more efficient.

Capital investments largely are coming from equity markets, VC firms, etc.
There's so much free cash floating around globally that there's little need to
leverage fractional reserve banking. That's why banks so vociferously oppose
margin controls--they're having to compete with all the cheap money.

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sandGorgon
[https://twitter.com/Werner/status/930404501810438144](https://twitter.com/Werner/status/930404501810438144)

 _Reports that #AWS is exiting its China business are completely wrong. Sinnet
transaction is to meet Chinese regulatory requirements. #AWS remains committed
to provide its service in China._ \- Werner Vogels

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hooluupog
What a misleading title.Beijing Sinnet is just a shell company of amazon
china(The same as Guxiang which is a shell company of google in china).

~~~
tristanj
>Beijing Sinnet is just a shell company of amazon china

No. Look at their website
[http://en.sinnet.com.cn/home/default/index.html](http://en.sinnet.com.cn/home/default/index.html)

北京光环 was founded in 1999 and run their own ISP and CDN. They are clearly not a
'just a shell company' and are a local partner.

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sk5t
It may be worth pointing out that AWS China supports about 10% of the services
one may find in other AWS regions--and not even basic features like MFA for
root or IAM accounts.

~~~
jaxondu
AWS China announced yesterday Lambda and API Gateway are available:
[https://www.amazonaws.cn/en/new/2017/](https://www.amazonaws.cn/en/new/2017/).
Interestingly these news are not published in the AWS dot com whats new page
but they did tweet about it.

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NicoJuicy
AWS continues to own the intellectual property for AWS Services worldwide

Mmmm, does China care about who owns the intellectual property? That's a first

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sudhirj
Looks like AWS finally realized their security offerings like encryption at
rest, KMSes, ACM etc were incompatible with China's datacenter laws. None of
the AWS offerings would have any credibility if they all had backdoors even in
one region. Think some of them can't even be backdoored.

~~~
unkoman
These services are not available in the China region.

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wonderous
Non-paywalled version: [http://m.nasdaq.com/article/amazon-to-sell-china-
cloud-servi...](http://m.nasdaq.com/article/amazon-to-sell-china-cloud-
services-unit-in-300-mln-deal-20171113-01544)

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gonyea
Yet another company driven out of China by government-industry collusion.

~~~
hndamien
Looks like Bitcoin is the only "company" succeeding in China.

~~~
adventured
Disney will probably do ok with their new park, if only because it's only 43%
owned by Disney.

Apple and Starbucks are among the few still thriving, for now. GM is also
still doing ok there, via a typical partial ownership arrangement.

McDonald's and YUM! Brands threw in their towels, after initially having
booming businesses.

~~~
seanmcdirmid
Starbucks is also in a JV for tier one cities. They are pushing into second+
tier cities because the Chinese government is letting them do it outside a JV.

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directionless
A somewhat misleading headline. Only the "Amazon Web Services' China business"

------
halite
I guess Jeff Bezos still need to learn few things from Jack Ma. Would be cool
to read the inside stories.

~~~
adventured
Like how to leverage the state to keep foreign competition out. Let's hope
Bezos doesn't learn that lesson.

Keeping in mind that half of Jack Ma's wealth derives from one of the greatest
thefts in world history, of Ant Financial from Alibaba shareholders (including
Yahoo and Softbank). Equivalent to Bezos discharging AWS into his own private
hands, without compensating Amazon shareholders. Let's also hope Jeff Bezos
doesn't learn that trick.

