Why China is taking over the cloud computing market

You’d be wise to assume that the fastest growing cloud computing company is one of the big 3; Google, Amazon and Microsoft. Though they may operate the largest networks of data centers yet they are definitely not the fastest growing companies in the cloud computing segment. [1] That honor belongs to Chinese giant Alibaba, in 2016 its cloud computing business grew by 126% and according to Simon Hu, president of Alibaba Cloud, growth is unlikely to stop. They plan to “match or surpass” Amazon Web Services by 2019. China’s whole cloud computing industry is growing uncontrollably. [1] This may be due to the fact that cloud services in China’s are different than the ones way me be familiar with.

The big 3’s first customers were only startups and later grew into bigger firms, almost all large firms have in-house IT systems, which they are hesitant to abandon. In China the cloud grew out of consumer services companies, most of the companies’ IT is underdeveloped so as Ji Xinhua, CEO of UCloud stated “They can jump directly to the cloud.” [1]

Another difference is regulation, with the big 3 large organizations like financial institutions and government agencies share data centres with other customers. [1] In China there are separate “industry clouds” dedicated to certain types of customers because according to Chong Chen of CIB FinTech they make things “more convenient” for regulators. [1]

The big 3 should be able to stay ahead. They are still far bigger and have a technological edge, but But the Chinese competitors have some advantages of their own. [2] They have a huge market given the growing appetite for on-demand video, mobile gaming and online content in China,  and these content providers will need to invest in their services to keep up with the demand. [2]

Most people in the West underestimate the tremendous size and growth of these companies in China. This is due to how the market is split, most western customers stick to western companies and asian customers adopt asian services. But the market in China is growing much more rapidly than in the USA, giving them an advantage. It will be hard for a western company to expand into this market since laws force foreign cloud firms to have a Chinese owned partner to operate local data centres. [1]

This rivalry is very evident in Europe and India where the big 3 currently dominate, but Chinese companies are catching up. Alibaba, for example, operates a dozen computing plants abroad and will open another one this month in India, near Mumbai. According to Mr Hu of Alibaba “We have taken on Amazon on all fronts.” [1]

We can do nothing but wait and see how this rivalry will evolve and wait and see if Alibaba’s claims to take over the industry actually happen.



[1] The Economist. (2018). Chinese tech companies plan to steal American cloud firms’ thunder. [online] Available at: https://www.economist.com/business/2018/01/18/chinese-tech-companies-plan-to-steal-american-cloud-firms-thunder [Accessed 13 Jul. 2018]. 

[2] Jing, M. (2018). Alibaba says it is on track to overtake Amazon in cloud business. [online] South China Morning Post. Available at: https://www.scmp.com/tech/enterprises/article/2114965/alibaba-says-it-track-overtake-amazon-worlds-top-cloud-computing [Accessed 13 Jul. 2018].


3 comments on “Why China is taking over the cloud computing market”

  1. I think it’s certainly accurate to say that many people would consider Amazon, Google, and Microsoft as the prominent cloud computing companies in the world today, but as mentioned, Alibaba, a Chinese e-commerce company, has managed to become a key cloud computing player in recent years. Alibaba entered the cloud computing realm in 2009 and has been actively engaged in many cloud-based projects. About two years ago, Alibaba invested in Aliyun (Alibaba Cloud) at which time the company’s cloud president Simon Hu commented “Our goal is to overtake Amazon in four years, whether that’s in customers, technology, or worldwide scale.” As of February 2017, Alibaba was actually sixth in the world behind AWS, Microsoft, Google, IBM, and Salesforce in terms of infrastructure, platform, and private cloud services.

    Although the market is undoubtedly a few years behind the U.S., it’s on track for unprecedented growth. Alibaba started with few customers, but as the market becomes more competitive, its ultimate goal is to attract enterprise customers and develop business models that can significantly minimize its dependence on its core services in China.

    Sources: https://techcrunch.com/2017/02/27/alibaba-aliyun-cloud-computing/

  2. The discussion about whether Alibaba will take over the market is indeed interesting. I think another major factor determining the outcome would be the political landscape between China and the Western market’s governments. As out of security concerns and other reasons, it is possible that some of the countries’ government ( for example the EU or US) might restrict the usage of chinese firm cloud computing service by company based and registered in their country. These factors might hinder Alibaba and other Chinese firms’ growth in the global market.

  3. Very interesting discussion regarding whether Alibaba will catch up and surpass the big 3. I do think it’s highly likely for several reasons. Firstly, as the blog mentioned, the industry is growing fast and the market size will be much larger. Government restriction of foreign company in China is also a big plus. Furthermore, Alibaba is good at international expansion. For example, Alipay become more and more common in many countries.


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