China’s Cloud Computing Market

Cloud Computing in China

China has done tremendous development and has succeeded to digitize its business system with groundbreaking results. During the current uncertain condition of the pandemic, the economy of almost all the countries has been badly suffered in different sectors where China has reached a record of 4.3 billion US dollars in 2020 and 7.3 billion US dollars in 2022 due to its cloud infrastructure services. People in China are now eager for cloud technology and it has been increasing by leaps and bounds. Specifically, cloud technology refers to networking, storage, computing, databases, machine learning, containers, etc. hosted on the cloud and accessible from the internet.

Cloud Computing Market Growth in China

There are many reasons why cloud technologies are imperative and most demanding within China. The growing demand for cloud technologies has increased domestically as well as internationally. The first reason is that China has the largest online population and internet users are millions. Similarly, they have aimed to get a well-organized, simple, and stable cloud environment. Secondly, China has the largest market with greater opportunities where people wish to benefit from cloud services to bring visible change and development in businesses. Because they believe that cloud services focus on helping enterprises with digital transformation with innovative technologies and products. Thirdly, the majority of people find cloud computing platforms secure for companies and businesses and offers very high reliability, availability, and durability for the data stored on the cloud. Fourthly, the central file storage system makes an easy platform for interdepartmental documents. Therefore, the users found it easy to undertake cloud technologies on a very large scale.

Cloud Service Providers in China

There are several cloud service providers that are functional in China such as Alibaba Cloud, Tencent Cloud, Huawei Cloud, AWS China, Azure China, Baidu AI Cloud, and others.

The American cloud service providers, Amazon Web Services (AWS) and Microsoft Azure are present in the Chinese cloud market. However, both are operated by local service providers. AWS and Azure have collaborated with Chinese companies to accomplish China’s regulatory and legal requirements. The Chinese cloud services providers such as Alibaba Cloud, Tencent Cloud, and Huawei Cloud are growing very fast in China, but also outside of China as they are expanding to other markets.

Cloud Market Share in China

Undoubtedly it’s very much clear that business in China has been rapidly increasing and everyone has their eyes on the Chinese cloud services to boost their businesses on a vast scale. It seems that in this modern era, cloud providers have reduced the risk of financial losses and the business is now much more secure. Many reports have shown that China’s market will reach 686.6 billion Yuan in 2020 and this would be a quarter of the projected worldwide market of 411 billion dollars. However, the statistics show that China is a great business opportunity and international companies are moving to the Chinese cloud.

Based on the Canalys China Public Cloud Service Tracker report of 2022 Q3, Alibaba Cloud is the largest cloud service provider in China with a 36% market share, followed by Huawei Cloud with a 19% market share, Tencent Cloud in the 3rd position with 16% market share and Baidu AI Cloud is the 4th largest cloud service provider with a 9% market share. However, these are the top cloud service providers, and they all control around 80% of the market share in China.

Source: Canalys China Public Cloud Service Tracker report of 2022 Q3

Operational Requirements in China

For the operational requirements, the cloud providers must make it possible that the users to provide valid identity information during the verification process to get access to the cloud services. The identity verification includes real name, valid contact information, company name, and business license. If the company does not have any legal unit within China, Rahi can provide support by fulfilling the verification mechanism on behalf of the customer. In this regard, Chinese law is very clear that the individual can’t get access to cloud services if the client fails to obtain an operating license. Furthermore, in accordance with the China Ministry of Industry and Information Technology, internet content providers must take permits through their hosting providers. The domain would not be functional without an ICP license and/or ICP filling.

In China, there are clear laws and regulations for migrating and managing cloud technologies for business purposes. The data centers are not directly connected internationally. In short, China doesn’t allow foreign cloud service providers to operate their data in China. According to Chinese laws and regulations, foreigners can only operate the data in China. They need to obtain a value-added telecom permit and foreign entrepreneurs need a separate user account to get access to their business personnel in China. This is the reason why AWS and Azure are collaborating with Chinese companies to operate their platform.

In addition, there are some issues and challenges faced by foreign investors while using cloud services in China. Firstly, the payment mechanism from overseas customers to cloud services provider in China is a little inconvenient. The cloud service in China only admits payments made by RMB which is troublesome, especially for foreign companies with no legal entity in China. Additionally, there are some extra compliance requirements that are mandatory, especially for foreign companies who wish to run a website in China to serve customers in China.

Conclusion

The Chinese cloud market is very vast and increasing very fast. In my opinion and based on the statistics, the Chinese cloud market will become the largest in the near future.

Additionally, Chinese cloud services providers such as Alibaba Cloud, Tencent Cloud, and Huawei Cloud are expanding rapidly to other markets in Asia, Europe, and even America. On the other hand, cloud platforms not only allow businesses to save money but also provide innovation and digitalization, which is crucial for businesses nowadays.