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AWS China Hopes to Benefit from China's 'Dual Circulation' Strategy

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REPORT REPRINT AWS China hopes to benefit from China’s ‘dual circulation’ strategy FEBRUARY 26 2021 By Agatha Poon The company believes that it is well placed to mobilize the dual-circulation strategy promulgated by China. Together with the likes of Sinnet, Ningxia Western Cloud Data Technology and local AWS Partner Program partners, AWS China wants to help democratize digitization while bringing industrial transformation to the next level. THIS REPORT, LICENSED TO AMAZON WEB SERVICES, DEVELOPED AND AS PROVIDED BY 451 RESEARCH, LLC, WAS PUBLISHED AS PART OF OUR SYNDICATED MARKET INSIGHT SUBSCRIPTION SERVICE. IT SHALL BE OWNED IN ITS ENTIRETY BY 451 RESEARCH, LLC. THIS REPORT IS SOLELY INTENDED FOR USE BY THE RECIPIENT AND MAY NOT BE REPRODUCED OR RE-POSTED, IN WHOLE OR IN PART, BY THE RECIPIENT WITHOUT EXPRESS PERMISSION FROM 451 RESEARCH. ©2021 451 Research, LLC | WWW.451RESEARCH.COM REPORT REPRINT Introduction China’s ‘dual circulation’ economic strategy, which is expected to be incorporated into the five-year plan for 2021-2025, has garnered considerable interest at the national and international levels. As the country sets out to restore its economic resilience in the post-COVID-19 era, the notion of creating a symbiotic relationship between internal and external economic forces is catching on. This is especially the case for Chinese tech firms, which have stepped up their global expansion plans under the Belt and Road Initiative. By the same token, foreign tech firms that have set foot in China are in harmony with the symbiotic vision of economic development for growth. AWS China believes that it is particularly well placed to mobilize the dual-circulation strategy promulgated by Chinese President Xi Jinping in May 2020. Together with the likes of Beijing Sinnet Technology (Sinnet, the operator and service provider of the Beijing region), Ningxia Western Cloud Data Technology (NWCD, the operator and service provider of the Ningxia region) and other local AWS Partner Program partners, AWS China wants to help democratize digitization while bringing industrial transformation to the next level. 451 TAKE AWS effectively leverages global resources to grow its portfolio of services and capabilities in China. By investing in building industry-focused expertise and developing localized knowledge and skills, it has proved its worth among transforming enterprises. However, selling in China isn’t as easy as it would be in less regulated countries, especially with the uniqueness of local culture and business practices. For AWS China to reach critical mass, it will need to tighten up AWS Partner Programs with incentives to scale its Chinese operations with local SIs and domain experts. Context With China being one of the strategic countries for scaling its global operations, AWS first established its local presence in 2013. As demand for local support grew, in 2016 the company announced the availability of the AWS China (Beijing) Region through a partnership with IDC operator Sinnet. A similar arrangement was made with NWCD in 2017 to set up the AWS China (Ningxia) Region. In compliance with Chinese regulations, Sinnet and NWCD, which have the required (IDC/VAS/ICP) licenses, are responsible as the service providers and operators of the Beijing and Ningxia regions, respectively. There are two availability zones in the Beijing region and three in the Ningxia region. Unlike other AWS global regions, the AWS China regions use local management console and account systems for billing and support charges, which stand on their own in terms of authentication and access to AWS services in China. In 2019 the company added a new Asia-Pacific region in Hong Kong. China is the only country to have three regions outside of the US, although customers will need to access AWS services in mainland China and Hong Kong using the respective portals. On the technology front, AWS is committed to driving technology innovation. There is discernible interest in data-driven technologies as 5G becomes increasingly available. According to the official data provided by the Ministry of Industry and Information Technology, China has built nearly 700,000 5G base stations and has more than 180 million 5G terminal connections. In 2019 AWS established IoT (Internet of Things) labs in Shenzhen and Taipei (Taiwan). It also operates an R&D lab in Shanghai to advance AI development and promote localized technologies. One example is a collaborative effort with researchers in China and the US to develop the Drug Repurposing Knowledge Graph using data analytics and machine learning tools. The DRKG is used to discover new drugs by identifying the ingredients of existing drugs and their potential interactions with human genes, biological processes REPORT REPRINT and side effects. As part of its ongoing effort to combat COVID-19, AWS has also provided support to research institutions around the globe by adding 65 life-science-related datasets to the Registry of Open Data on AWS. While the idea of using renewable energy has caught the attention of IDC providers, many of them are taking a wait-and-see approach. With that said, AWS has joined a group of active players to promote awareness of energy-saving technologies and renewable energy with the announcement of its first renewable energy project in Shandong. If everything is on track, the project is expected to generate 128,000 MWh of clean energy annually. To bridge the skills gap, AWS works closely with government agencies (including the Ministry of Education), educational institutions and business organizations through a multitude of programs and initiatives, including AWS Educate, AWS Academy, AWS Cloud Credits for Research and AWS Cloud Innovation Academy, to empower educators to transform their practices and learning environments while creating employment opportunities. Product Globally, AWS has more than 175 fully functional services to support diverse use cases and industry verticals. While the goal is to provide customers with a consistent product portfolio, not all products are available in the China region. The China team indicates that it has been working on closing the product gap, and in 2020 AWS China launched more than 400 services and features in the China regions, including sought-after products such as Amazon SageMaker Studio. Accordingly, Amazon SageMaker Studio is only available in six AWS regions around the globe, two of which are in China. It has also released Amazon Document DB with MongoDB compatibility to support customers running MongoDB workloads. Its most recent offerings include Amazon FSx for Windows and Amazon FSx for Lustre. The company finally unveiled AWS Marketplace China operated by NWCD in 2020, with more than 200 third-party software offerings coming online. The China team has also invested in building vertically focused offerings. Spot Tagging Bot, which is touted as a locally developed offering that utilizes machine learning technology to label unstructured data, such as photos, PDF files and videos, is gaining traction in the banking, financial services and insurance industry for unstructured data management. Additionally, EdTech companies and educational institutions are turning to open source technologies like BigBlueButton, an open source video conference system with features such as multi-user whiteboards and breakout rooms, to deploy their own online education platforms on AWS Cloud. Overall, AWS services are generally available in both the Beijing and Ningxia regions, but some services are only available in one of the two regions. For example, AWS IoT Analytics is limited to businesses in the AWS China (Beijing) region. As a rule of thumb, AWS will prioritize/add new features based on initial user feedback and then roll out an updated version of the product globally. Aligning with China’s dual-circulation strategy Against the backdrop of China’s dual-circulation economic strategy, AWS believes that it is well- positioned to mobilize the ‘external’ circulation by accelerating the globalization of Chinese companies while strengthening the ‘internal’ circulation by empowering overseas companies to solidify their operations in China. Having a global network of AWS partners is instrumental to help onboard customers and scale its operations. In-line with the Belt and Road Initiative, AWS China has already worked with AWS Partners to bring Chinese companies to international market segments. Examples of Chinese companies going global include CIMC, Globalegrow, Cheetah Mobile, Midea, OnePlus and Huya. REPORT REPRINT OnePlus, a high-end smartphone manufacturer operating in dozens of countries and regions around the world, utilizes the AWS cloud infrastructure to deploy overseas company and community websites and provide support to its overseas flash sale platform. Accordingly, it took only five days to complete the deployment of a global system to support its overseas businesses, and all overseas shopping sites were migrated to AWS. To meet the stringent requirements of the EU’s GDPR, OnePlus uses the GDPR-ready AWS Cloud to process user data in a safe and compliant manner. On the other hand, AWS is committed to providing global companies operating in China with the resources and support needed to create an enriched user experience. Global companies such as Coca-Cola, Toyota Connected, Canva and Softbank Robotics, which already have strong footholds in China, continue to turn to technologies for operational efficiency and enhanced customer experience. For Toyota Connected, the ability to inject, store, decode, convert and analyze the massive amount of data generated by millions of vehicles in real time using a unified data lake is deemed valuable to customers. For example, by providing an analysis of driving behavior, it can help drivers secure car insurance discounts by demonstrating safe driving. AWS partners AWS has done a good job of growing its Partner Program. Under this program, which comprises thousands of partners, the China team has forged strategic partnerships with well-known domestic and foreign IT providers, such as KPMG, Capgemini, Deloitte, Digital China, Ultrapower Software and Futong.
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