Page 500 - 2021 White Paper
P. 500
1 White Paper on the Business Environment in China
environment. But drafting more standards alone 4.7% of its GDP, and 11.4% of that is spent on public
does not shape the next generation of technology. cloud services. This suggests ample potential for
Company leadership needs to ensure that China’s cloud market. China is currently a lagging
they continue to invest in technical standards country in the cloud market—lagging four or more
experts. These professionals require a unique years behind the United States). However, beyond
skill set of technical expertise and the ability to 2023, China is expected to become a tracking
work across companies in a large and complex country—lagging behind the U.S. by less than three
bureaucracy. It requires significant travel and years (LD Investments).
consistent, long-term participation in order to
fully learn the ropes and gain influence. The The ongoing shift to cloud in China will accelerate
results of these investments are not immediate, as the economy regains momentum post-Covid
but they are essential to the continued success shutdown, with new digital transformation
and leadership of technology companies. opportunities emerging, funded by Chinese
government economic stimulus measures. Access
Cloud Computing to on-demand compute resources proved to
be vital during the quarter as the coronavirus
Although China is a fast-growing, important crisis escalated. Many businesses were able to
market for global cloud computing, the country maintain operations through remote working and
presents serious challenges for U.S. cloud access to data and applications, while students
providers. Regulatory restrictions, including continued to learn via collaboration platforms. This
strict requirements to operate with a local demonstrated the growing importance of cloud
partner, some aspects of governmental decision- services and the central role they have played in
making, and local competition make China a enabling digital transformation. But some large,
problematic market for even large experienced complex and consulting-led projects were disrupted
U.S. providers. Operating in China therefore due to workplace shutdowns, which also affected
requires substantial resources, flexibility, and a negotiations and bidding processes. But new cloud
long-term outlook (PSN). migration and cloud-native opportunities are
emerging as organizations assess their response
China's cloud computing market is already the to the crisis, optimize future emergency continuity
world's second largest but is still just about one- plans and develop new processes and services.
tenth the size of the United States (the world's Additional funding through government-led “new-
largest), and China's cloud spending accounts for infrastructure” economic stimulus measures into
a tiny fraction of the country's total IT spend. This areas such as connectivity, healthcare, education,
suggests tremendous room for growth. China’s transport and urban areas will also drive cloud use
cloud computing market is growing at a rapid well into 2021. China’s stimulus measures differ
clip. During the year 2019, the country’s cloud from those in the rest of the world by focusing
infrastructure spending increased 63.7% to US$ investment on 5G, AI, cloud computing, electric
10.7 billion, making it the second-biggest cloud vehicles, IoT and robotics to restructure the
market in the world with a 10.8% market share. economy and drive growth through innovation.
Yet, China’s public cloud market is minuscule These opportunities will further intensify
compared to the US, the world’s biggest public competition among the leading cloud service
cloud market, where cloud spending was more providers, which subsequently outlined large
than 10 times higher at a projected US$ 124 billion investment plans and technology advancements to
in 2019. Furthermore, according to a 2019 report increase their capabilities in these areas (Williams).
by the National Association of Software and Service
Companies (NASSCOM), China’s IT spend accounts The growth of Alibaba’s cloud business
for just 1.4% of the country’s GDP, and a tiny 2.7% outpaced Amazon and Microsoft in the quarter
of its total IT expenditure is spent on cloud services. ending in September 2020, and the Chinese
This compares with the United States, the world’s tech giant reiterated its commitment to making
largest cloud market, where IT spend accounts for the unit profitable by next March 2021. Alibaba
reported cloud computing brought in revenue of
500
environment. But drafting more standards alone 4.7% of its GDP, and 11.4% of that is spent on public
does not shape the next generation of technology. cloud services. This suggests ample potential for
Company leadership needs to ensure that China’s cloud market. China is currently a lagging
they continue to invest in technical standards country in the cloud market—lagging four or more
experts. These professionals require a unique years behind the United States). However, beyond
skill set of technical expertise and the ability to 2023, China is expected to become a tracking
work across companies in a large and complex country—lagging behind the U.S. by less than three
bureaucracy. It requires significant travel and years (LD Investments).
consistent, long-term participation in order to
fully learn the ropes and gain influence. The The ongoing shift to cloud in China will accelerate
results of these investments are not immediate, as the economy regains momentum post-Covid
but they are essential to the continued success shutdown, with new digital transformation
and leadership of technology companies. opportunities emerging, funded by Chinese
government economic stimulus measures. Access
Cloud Computing to on-demand compute resources proved to
be vital during the quarter as the coronavirus
Although China is a fast-growing, important crisis escalated. Many businesses were able to
market for global cloud computing, the country maintain operations through remote working and
presents serious challenges for U.S. cloud access to data and applications, while students
providers. Regulatory restrictions, including continued to learn via collaboration platforms. This
strict requirements to operate with a local demonstrated the growing importance of cloud
partner, some aspects of governmental decision- services and the central role they have played in
making, and local competition make China a enabling digital transformation. But some large,
problematic market for even large experienced complex and consulting-led projects were disrupted
U.S. providers. Operating in China therefore due to workplace shutdowns, which also affected
requires substantial resources, flexibility, and a negotiations and bidding processes. But new cloud
long-term outlook (PSN). migration and cloud-native opportunities are
emerging as organizations assess their response
China's cloud computing market is already the to the crisis, optimize future emergency continuity
world's second largest but is still just about one- plans and develop new processes and services.
tenth the size of the United States (the world's Additional funding through government-led “new-
largest), and China's cloud spending accounts for infrastructure” economic stimulus measures into
a tiny fraction of the country's total IT spend. This areas such as connectivity, healthcare, education,
suggests tremendous room for growth. China’s transport and urban areas will also drive cloud use
cloud computing market is growing at a rapid well into 2021. China’s stimulus measures differ
clip. During the year 2019, the country’s cloud from those in the rest of the world by focusing
infrastructure spending increased 63.7% to US$ investment on 5G, AI, cloud computing, electric
10.7 billion, making it the second-biggest cloud vehicles, IoT and robotics to restructure the
market in the world with a 10.8% market share. economy and drive growth through innovation.
Yet, China’s public cloud market is minuscule These opportunities will further intensify
compared to the US, the world’s biggest public competition among the leading cloud service
cloud market, where cloud spending was more providers, which subsequently outlined large
than 10 times higher at a projected US$ 124 billion investment plans and technology advancements to
in 2019. Furthermore, according to a 2019 report increase their capabilities in these areas (Williams).
by the National Association of Software and Service
Companies (NASSCOM), China’s IT spend accounts The growth of Alibaba’s cloud business
for just 1.4% of the country’s GDP, and a tiny 2.7% outpaced Amazon and Microsoft in the quarter
of its total IT expenditure is spent on cloud services. ending in September 2020, and the Chinese
This compares with the United States, the world’s tech giant reiterated its commitment to making
largest cloud market, where IT spend accounts for the unit profitable by next March 2021. Alibaba
reported cloud computing brought in revenue of
500
