Will Cloud Computing in China Be a Boon or Peril for Business?
September 10, 2013
Grazed from BusinessWeek. Author: Christina Larson.
There are few $100 billion industries in China that foreign investors and service providers aren’t rushing to compete for a slice of. But a new report by the Washington-based Center for Research Intelligence and Analysis (CRIA) highlights how China’s fast-expanding cloud-computing sector could contain land mines.
Cloud computing is growing quickly in China, thanks to heavy government support. The country’s overall cloud-computing value chain is expected to be worth at least $122 billion by 2015, according to the China Software Industry Association. The same benefits driving the adoption of cloud computing in the U.S. and elsewhere—including easy data storage and low maintenance costs—are behind its gradual adoption in China, especially in select government agencies and finance, petrochemicals, and health-care sectors. There’s still a lot of room for expansion, though. China has the world’s largest population of Internet users, and by the end of the year there will be 500 million smartphones, which utilize software and applications based in the cloud, online in China…
Expanding cloud computing in China was declared a top priority in the government’s 12th Five-Year Plan, released in 2011, alongside other efforts to spur “next generation” industries. Today there are at least 40 public cloud projects under way in China, and Beijing alone has received more than $8 billion to support constructing servers and other infrastructure. To be sure, not all of what’s been built so far passes international muster. An Hui, a director at the China Center for Information Industry Development, in January told the Chinese press that “the industry is still only in its infancy” and that overzealous local officials had sometimes pushed showcase projects with minimal utility or faulty designs. Meanwhile, mainland China has average Internet download speeds of just 3.14 megabits per second (Mbps)—far slower than Hong Kong, where the Internet races at 44.14 Mbps. (Mainland China’s Internet censorship, aka the Great Firewall, also slows down Internet speeds.)…
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