Specifically, the cloud computing division called Amazon Web Services (AWS) is giving up "certain physical infrastructure assets to" Beijing Sinnet Technology Co, like computing equipment, reports Reuters, citing an Amazon spokesman.
The e-retailer added that it sold its physical assets of AWS to Sinnet in order to comply with the Chinese law.
"AWS continues to own the intellectual property for AWS services worldwide".
It looks like Amazon is removing itself from the Chinese cloud services industry on account of stringent new data laws that went live in the country earlier this year.
Charlie Dai, a Beijing-based analyst at Forrester Research, feels that the move was necessary for AWS to improve its other business areas in the market.
AWS has another hardware venture with the provincial government in Ningxia located in the northwest region of China.
AWS first launched a China service in 2014, but must operate via local partners to comply with Chinese law, with companies required to store data locally in legislation enacted in June. The service has outperformed its competitors throughout the world with a market share of over 40% globally in 2016, much more than Microsoft and Alibaba, according to Gartner.
The move places a big shadow over foreign ventures of a similar nature in China.
China favors domestic firms over foreign ones with paternalistic policies. Besides cloud services, Beijing is also tightening its grip on online expression, cracking down on virtual private networks often used to dodge internet restrictions and strictly regulating writings on platforms such as blogs. The rule makes it hard to use data globally, greatly complicating operational strategies for many overseas companies, and countries including the USA have voiced concerns about the legislation's enforcement.
Amazon shares acquired 50 cents to $1,129.67 mid-morning Tuesday.
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