Cloud Computing in China

In this blog post I’m going to touch the most important topics about cloud computing in China and try to solve all your questions and doubts about the Chinese cloud market.

Introduction

China has done tremendous development and has succeeded to digitize their 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 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, and databases hosted on the internet. Instead of physical hardware, employees wish to access the online business data and backup through the cloud.  

What are the reasons of the Chinese cloud market growth?

There are many reasons why Cloud technologies are imperative and most demanding within China. The growing demand for cloud technologies has been increased domestically as well as internationally. The first reason is that China has the largest online population and internet users are in 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 the cloud services to bring visible change and development in businesses. Because they believe that Cloud services focus on helping enterprises for 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 the interdepartmental documents. Therefore, the users found it easy to undertake this cloud computing on a very large scale.

Cloud Service Providers in China

As I mentioned earlier, China has the largest online population with 800 million internet users. Therefore, cloud technology has been swiftly developed in various sectors in the Chinese business community. There are several cloud service providers that are functional in China such as Alibaba Cloud, Tencent Cloud, Huawei Cloud, AWS China, Microsft Azure China, Baidu, 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 collaborations with Chinese companies according to accomplish China’s regulatory and legal requirements.

The Chinese cloud providers such as Alibaba Cloud, Tencent Cloud and Huawei Cloud are growing very fast and expanding to other markets outside China as of the Gartner Market Share report of 2019.

Source: Gartner Market Share: IT Services,2019

Cloud Market Share in China

Undoubtedly it’s very much clear that the business in China has been rapidly increasing and everyone has their eyes on the Chinese cloud services to boost up their businesses on a very large scale. It seems that in this modern era, the cloud providers have reduced the risk of financial losses and the business is now much secured. 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 clouds.   

Based on the IDC China Public Cloud Service Tracker report of 2019 Q3, Alibaba Cloud is the largest cloud service provider in China with a 41,7% market share, followed by Tencent Cloud with a 12,1% market share, Huawei in the 4th position with 7,1% market share and AWS is the 5th largest cloud service provider with a 7.1% market share. However, these are the top cloud service providers, and they all control around 70% of the market in China.

Source: IDC China Public Cloud Service Tracker, 2019 Q3

Which Chinese cloud service provider to choose?

Regardless of which cloud service provider do the customers use within China ultimate objective is to get benefits out of all cloud services. Users have now more options and have better flexibility to acclimatize the changes in the business. Comparatively cloud service is the most reliable and protected platform where the cloud services provide stronger infrastructure and unlimited data centers while on the other hand, any company-owned data center is usually small and limited. There are clear and straightforward requirements to obtain cloud services within China. The identity verification such as real name, valid contact information, company name, and business license. If the company does not have any legal unit within China, a cloud service provider could provide support by acquiring the service and fulfill the verification mechanism on behalf of the customer.

Chinese Cloud Services Comparison

To make the information about all Chinese public cloud providers services more accessible and to be able to compare them in an easy and fast way, we have created the following page: /chinese-cloud-comparison/.
The cloud providers constantly evolving their platforms. Therefore, we will continuously update that page with new services.

Operational requirements in China

For the operational requirements, the cloud providers must make it possible that the users 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, a cloud service provider could provide support by acquiring the service and fulfill the verification mechanism on behalf of the customer. In this regard, Chinese law is very clear that the individual can’t get access to the cloud services if the client fails to obtain an operating license. Furthermore, in accordance with the China Ministry of Industry and Information Technology, the internet content providers must take permit through their hosting providers. The domain would not be functional without an ICP license and ICP filling.

In China, there is a clear law and regulation 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 personal in China.

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 the 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. In my opinion and based on the statistics, the Chinese cloud market will become the largest in the near future. Additionally, the Chinese cloud service 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 providing innovation and digitalization, which is crucial for businesses nowadays.

About Roopu Cloud

If you are planning or about to start your business in China and need help with you cloud infrastructure, do not hesitate to contact us.

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