No results found. Please try again.

THIS MATERIAL IS A MARKETING COMMUNICATION.

Video: China IaaS Landscape

Since 2020, China has witnessed a significantly accelerating pace of business digitalization due to Covid-19, leading to a rise in the adoption of cloud. With the government's support in new infrastructure development, enterprises' continuous cloud migration, China's unique cloud market will continue to advance with high prospects.

In this video, we will discuss in detail China's Cloud IaaS industry and the current competitive landscape.

Industry Size

China's cloud market is growing rapidly, with a CAGR of 31% from Rmb96.3billion in 2018 to Rmb375.4billion in 2023E (according to China Academy of Information and Communications Technology (CAICT), the White Paper of Cloud Computing, published in July 2020). Compared to traditional on-premise deployment, cloud infrastructure is more affordable (less Capex requirements upfront for physical servers and other data center-related procurement), and improves agility as well as scalability. Since 2020, Chinese enterprises' pace of digitalization has significantly accelerated due to Covid-19, leading to a continuous rise in the adoption of cloud.

The total size of public cloud surpassed that of private cloud in 2019, mainly attributable to increasing demand from internet companies, large private enterprises and SMEs (small to medium-sized enterprises). Due to security concerns, governments and large SOEs (stated-owned enterprises) were inclined to deploy core functionalities on private cloud but started to move general operations onto the public cloud. As a result, hybrid cloud became a popular solution for these customers.

IaaS is an instant computing infrastructure, provisioned and managed over the internet. Each resource is offered as a separate service component (quoted from "Microsoft Azure" website), which can be purchased by end-customers when needed. Key product offerings of IaaS include virtualized servers, storage, networking in an on-demand model, etc.

Currently, IaaS is the major constituent of China's public cloud market, as it is usually the first layer for customers' cloud deployment. The IaaS market size will grow by four times in five years, starting from 2018 to Rmb148.0billion in 2023E (according to CAICT, April 2021).

Competition Landscape and Major Players

Today, Alibaba Cloud is among the world's top three IaaS providers and China's largest provider of public cloud, with more than a million paying customers. (AliCloud website, as of Feb. 2021). According to Canalys, AliCloud has a market share of 44%+ (as of 2020 first quarter, in terms of cloud infrastructure service spend), larger than the next top 3 players (Huawei, Tencent and China Telecom) combined.

We attribute AliCloud's market leadership to the following three reasons:

  • An Early Mover Advantage

    Alibaba was the first internet company to establish a cloud business. Back in 2009, AliCloud was founded with the aim to enhance the company's internal computing architecture, particularly for shopping festivals.
  • Strong Research & Development Capability and Extensive Investment Commitments

    Alibaba's massive investment in cloud infrastructure development, strong synergies with core businesses such as e-commerce and Online To Offline (O2O) should help to fuel the rapid expansion of its cloud business. In addition, Alibaba DAMO Academy, a research department founded in 2017 as part of Alibaba's US$15billion R&D plan (2017-2020, as per company), has become the main driving force of Alibaba's cloud technology advancements. In May 2020, AliCloud announced it would invest Rmb200billion (US$28billion) in the next three years to support the construction of data centers, operation systems, servers, and other digital research initiatives.
  • Comprehensive Product Portfolio, Ranging from Networking, Cloud Computing and Big Data to AI, Middleware and Cloud Security

    Huawei remains dominant in the private cloud space but has been rapidly catching up in public cloud product development. The company ranks No.2 in public cloud IaaS from a mere 5th place in first half 2019 (according to IDC International Data Corporation, Nov. 2019). Its large customer base in government/SOEs, strong cross-selling capabilities and comprehensive products/services that span across the entire technology chain has helped its acceleration.


Rising Trends: Multi-Cloud Strategy

As businesses continue to migrate to the cloud, they increasingly adopt multi-cloud strategies to reduce vendor lock-in risks, especially with vendors from large ecosystems who may be in direct business with competitors. We anticipate a higher multiple in cloud adoption rate 26% (according to Frost & Sullivan Mar. 2020) to drive incremental demands for not only leading cloud service providers but also independent players like Kingsoft Cloud.


Disclaimer & Information for Investors

No distribution, solicitation or advice: This document is provided for information and illustrative purposes and is intended for your use only.  It is not a solicitation, offer or recommendation to buy or sell any security or other financial instrument. The information contained in this document has been provided as a general market commentary only and does not constitute any form of regulated financial advice, legal, tax or other regulated service.

The views and information discussed or referred in this document are as of the date of publication. Certain of the statements contained in this document are statements of future expectations and other forward-looking statements.  Views, opinions and estimates may change without notice and are based on a number of assumptions which may or may not eventuate or prove to be accurate. Actual results, performance or events may differ materially from those in such statements. In addition, the opinions expressed may differ from those of other Mirae Asset Global Investments’ investment professionals.

Investment involves risk: Past performance is not indicative of future performance. It cannot be guaranteed that the performance of the Fund will generate a return and there may be circumstances where no return is generated or the amount invested is lost. It may not be suitable for persons unfamiliar with the underlying securities or who are unwilling or unable to bear the risk of loss and ownership of such investment. Before making any investment decision, investors should read the Prospectus for details and the risk factors. Investors should ensure they fully understand the risks associated with the Fund and should also consider their own investment objective and risk tolerance level. Investors are advised to seek independent professional advice before making any investment.

Sources: Information and opinions presented in this document have been obtained or derived from sources which in the opinion of Mirae Asset Global Investments (“MAGI”) are reliable, but we make no representation as to their accuracy or completeness. We accept no liability for a loss arising from the use of this document.

Products, services and information may not be available in your jurisdiction and may be offered by affiliates, subsidiaries and/or distributors of MAGI as stipulated by local laws and regulations. Please consult with your professional adviser for further information on the availability of products and services within your jurisdiction. This document is issued by Mirae Asset Global Investments (HK) Limited and has not been reviewed by the Securities and Futures Commission.

Information for EU investors pursuant to Regulation (EU) 2019/1156: This document is a marketing communication and is intended for Professional Investors only. A Prospectus is available for the Mirae Asset Global Discovery Fund (the “Company”) a société d'investissement à capital variable (SICAV) domiciled in Luxembourg structured as an umbrella with a number of sub-funds. Key Investor Information Documents (“KIIDs”) are available for each share class of each of the sub-funds of the Company.

The Company’s Prospectus and the KIIDs can be obtained from www.am.miraeasset.eu/fund-literature . The Prospectus is available in English, French, German, and Danish, while the KIIDs are available in one of the official languages of each of the EU Member States into which each sub-fund has been notified for marketing under the Directive 2009/65/EC (the “UCITS Directive”). Please refer to the Prospectus and the KIID before making any final investment decisions.

A summary of investor rights is available in English from www.am.miraeasset.eu/investor-rights-summary.

The sub-funds of the Company are currently notified for marketing into a number of EU Member States under the UCITS Directive. FundRock Management Company can terminate such notifications for any share class and/or sub-fund of the Company at any time using the process contained in Article 93a of the UCITS Directive.

Hong Kong: This document is intended for Hong Kong investors. Before making any investment decision to invest in the Fund, Investors should read the Fund’s Prospectus and the information for Hong Kong investors (of applicable) of the Fund for details and the risk factors. The individual and Mirae Asset Global Investments (Hong Kong) Limited may hold the individual securities mentioned. This document is issued by Mirae Asset Global Investments (HK) Limited and has not been reviewed by the Securities and Futures Commission.

Copyright 2021. All rights reserved. No part of this document may be reproduced in any form, or referred to in any other publication, without express written permission of Mirae Asset Global Investments (Hong Kong) Limited.

ADDRESS

  • Unit 1101, 11/F, Lee Garden Three, 1 Sunning Road, Hong Kong

TEL

  • 2295 1500

This website is intended for Hong Kong investors only. Your use of this website means you agree to our Terms of use. This website is strictly for information purposes only and does not constitute a representation that any investment strategy is suitable or appropriate for an investor’s individual circumstances. Further, this website should not be regarded by investors as a substitute for independent professional advice or the exercise of their own judgement. The contents of this website is prepared and maintained by Mirae Asset Global Investments (Hong Kong) Limited and has not been reviewed by the Securities and Futures Commission of Hong Kong.