With New Data Center In China, Apple Leads Corporate Reaction To Stringent Cybersecurity Laws

China has always been a tough place to do business and many overseas companies have learned this the hard way. That said, China is such a lucrative opportunity that businesses aren't yet ready to pass it up.

This fact came through in a recent announcement by Apple Inc. AAPL that it would set up its first data center in China, according to media reports.

Apple said the data center would be operated with Guizhou-Cloud Big Data Industry Co. Ltd, a local data management company. The unit is to be set up in the southern province of Guizhou and would involve an investment of about $1 billion.

Apple would have control over the encryption keys at the data center, although it isn't clear if it would have access to the data per se, according to Dow Jones.

Incidentally, way back in 2014, as a reconciliatory move, Apple decided to store some data at the data center of state-run China Telecom. The company, however, reasoned that local storage would improve performance for Chinese customers.

Apple's Chinese customers will now transition to a co-branded cloud storage platform it would operate along with its Chinese partner.

Why The Move?

China approved a few cyber security regulations in June and these regulations were vaguely worded, creating doubts in the minds of foreign companies as for how these would be enforced. The regulations include making it mandatory for all data to be stored within China and companies being subjected to security reviews.

The data center would ensure strong data privacy and security protections, providing scope for no back doors being created in its systems, the New York Times said quoting Apple.

"The addition of this data center will allow us to improve the speed and reliability of our products and services while also complying with newly passed regulations," the company said.

Setting A Precedence

Apple's smart move to gain a foothold in a market, where it had to face several rebuttals in the past, could influence other companies to follow suit, thereby helping them to circumvent the stringent domestic cybersecurity regulations.

Incidentally, blue chips such as International Business Machines Corp. IBM, Microsoft Corporation MSFT and Amazon.com, Inc. AMZN operate their own China-hosted cloud services in tie-up with local partners for years now.

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