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Amazon’s Big Battle in China
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Amazon’s Big Battle in China

Zhang Jun and Song Wei
Caijing Magazine, 2016
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Recommendation

Amazon’s cloud computing services have become the company’s cash cow. And, of course, the Internet giant doesn’t want to pass up the lucrative cloud computing market in China. But as every foreign Internet company that has set foot in China can attest, entering the Chinese market is no easy feat. For years, negotiations stalled; and when Amazon finally had a deal, new government policies soon crippled it. In this article from Caijing magazine, reporters Zhang Jun and Song Wei detail Amazon’s bumpy journey in China. They also take a stance by warning against using old ways of governance to regulate new industries. To prevent the shrinking of foreign investment, they urge the government to issue clear regulations and implementation processes. getAbstract recommends their analysis to corporate executives with eyes on the Chinese market and anyone curious about why foreign Internet companies struggle in China.

Summary

Amazon Web Services (AWS), the branch of Amazon devoted to big data and cloud-computing, has expanded its business to China by building a data center in Zhongwei City, located in the Ningxia Hui Autonomous Region (NHAR) of Western China. The center will eventually cover 300,000 square meters [3.2 million square feet] and contain 400,000 servers. Although negotiations for AWS China began in 2012, the project wasn’t underway until 2015. Amazon made AWS available to parts of China in September 2016 but is still in the process of rolling it out to the rest of the country.

Amazon chose Zhongwei – which is 1260 kilometers [783 miles] from Beijing and surrounded by desert – for strategic reasons. The city is located at the geometric gravity center of China and thus represents the best place for routing fiber-optic networks across the whole country. Zhongwei’s average temperature is 8.8°C [48°F]. The cool climate helps prevent servers from overheating and keeps air conditioning costs down. Zhongwei also has the lowest electricity cost in the country.

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About the Authors

Zhang Jun and Song Wei are reporters for Caijing, an independent magazine that covers societal, political and economic issues.

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