Amazon said that it will sell few physical assets only and own the intellectual property of Amazon Web services (AWS) worldwide.
Amazon Web Services confirmed in a statement reported by WSJ that this move was meant to meet compliance requirements in China.
Amazon is committed to establish in China, and is looking forward for significant business opportunities and growth potential for the next few years. "In order to comply with Chinese law", Amazon "sold certain physical infrastructure assets to Sinnet", it said.
The U.S. ecommerce giant signed a deal to allow Sonnet use AWS services in China in August 2016.
Amazon isn't the only one to make decisions based off a desire to stay in China.
AWS has another hardware venture with the provincial government in Ningxia located in the northwest region of China. Microsoft has its Azure cloud services operating in partnership with 21Vianet Group, which is based in China.
Beijing Sinnet Technology Co. told the Wall Street Journal that the asset acquisition 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".
With Alibaba's cloud services expanding rapidly, it looks as if China is resolved to sit on its own cloud.
The move places a big shadow over foreign ventures of a similar nature in China.
All these tech giants face a tight regulatory environment in China, which could be the primary reason that AWS China is quickly toeing the line before any unpleasantness occurs. Foreign firms there have long complained about local restrictions that appeared to favor domestic players.
Amazon shares acquired 50 cents to $1,129.67 mid-morning Tuesday.