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How Contemporary China Fares As a Cloud MarketBy CIOAdvisor Apac | Friday, September 06, 2019
IT departments across enterprises have incorporated cloud technologies, and the hybrid cloud is being viewed as the next frontier with respect to enterprise efficiency. This trend is emerging in the APAC region as well.
FREMONT, CA: Cloud computing in the APAC region has been quite significant in the regions’ attempts towards facilitating a shift from the conventional ways of operating. Its popularity is continuing as more and more firms are thriving on the technology’s ability to allocate resources more efficiently in sync with the business requirements. There has been critical progress in terms of an organizations flexibility, cost-efficiency, and agility post the implementation of cloud.
In the region, as a common trend, a considerable number of enterprises recognize the drawbacks of a somewhat siloed multi-cloud approach. Amidst this, the hybrid cloud is emerging as the most agreed-upon technology to enhance business agility. Among the APAC countries, China is witnessing exciting trends with respect to the cloud.
As another common trend, the increasing demand for public cloud applications is sure to prevail as businesses continue to incorporate them to new types of applications, such as business intelligence, risk management, finance, big data analytics, and enterprise asset management. This emergence of cloud has also been replacing many active licensed software.
China’s Cloud Computing Market
In China, small and medium-sized businesses have been the initial adopters with respect to cloud services. Internet SMBs have also been part of the initial interest in the technology. The bigger enterprises sector was more or less untapped.
The Chinese Cloud Companies consume about 40 percent of the region’s cloud market. Also, cloud providers belonging to China are firmly placed when it comes to the top cloud providers in the region. These are findings from a recent Q1 data by the Synergy Research Group.
Also, China is the only nation in the entire APAC region wherein local companies have been the top contributors to its growth as a cloud hub. The leading cloud providers in the countries are regional companies; a few of them being Huawei, Kingsoft, etc. A similar scenario of local companies dominating the cloud market is seen in the U.S. only. Rest of the countries belonging to APAC has their cloud foundation growing due to presence of enterprises like Google, Amazon, Microsoft, etc.
What Causes the Gap between China and the Global Cloud Market?
China has achieved significant progress as a cloud hub and, today, is at a position to offer tough competition to the rest of the world. However, currently, China’s focus is more on the home market. Industry specialists cite several cultural, business, and language barriers, which force the country to retain its focus on the domestic market. On the contrary, many countries in APAC have a global outlook.
However, within about four to five years, say by 2023, the Chinese cloud market is posed to be the top market across the globe, as per recent research by the IDC. Yet, currently, the market is still developing. In comparison with the U.S. Market, China is about one-tenth of the U.S. market.
China presently employs quite a few standard regulations, which prohibit international cloud firms to secure an easy entry into China. Also, the Chinese market is not quite ready when it comes to a complete transformation to the cloud. This has also been a preventive factor for global cloud companies to flourish in China.
A common trend underlying several cloud markets is the increased affinity towards public cloud. However, China is still dominated by the interest in private cloud. Experts say the willingness to adopt public cloud can be significant in climbing the ladder of success in the cloud market, both in the APAC region and at the international level.
The one-off purchase model of the private cloud is in sync with China’s preferences of owning software and hardware rather than outsourcing them. Many businesses prefer to retain their control on workloads and respective data for security concerns.
Also, the private cloud remains the nation’s favorite as a platform for organizations to make the necessary transition towards conventional IT to the modern ways of the cloud. However, it is the public cloud which extends the complete iteration of the transition.
Many cloud enablers belonging to China retain a huge customer base. However, the revenue generated by each consumer is much lesser, affecting the total revenue.
In the recent past, many foreign nations have noticed the untapped potential in China as a global cloud enabler and have made significant investments. However, the attempts towards setting-up cloud networks were not successful. For instance, considering tech player Amazon, which brought in some investments, currently accounts for a mere six percent of the Chinese public cloud sector, especially in the IaaS industry. These are observations from an analysis of the Chinese market by the IDC.
Also, nationwide, China is showing reluctance in spending huge amounts of money towards IT investment. It proved tough to convince the firms to make a significant investment for the development of a public cloud.
Ignorance is prevalent concerning the technical know-how. And, many enterprises are still not aware of the real potential brought in through cloud computing. In some other cases, the right application scenario is not achieved yet.
For Example, the Alibaba cloud is technologically advanced and requires technical expertise for proper deployment. Many Chinese enterprises lack the kind of skills required for such high-level deployment.
Considering its potential to be a top cloud enabler at the international level, it is evident that transformational changes in the existing infrastructure are vital. Despite the initial setbacks, foreign cloud provider’s interest still persists in China’s cloud market. China has to change its laws and widespread speculation about unwillingness to invest in emerging technologies. The required technological upgrade is also mandatory for not only SMBs but also large players.