Why China's companies are building cloud

Technology has been my beat for more than a decade now — part of my job as a business journalist is to keep a close eye on the latest trends and developments in China's ever-changing high-tech sector. I can tell you some Chinese enterprises have slowed the pace of their "going global" process. They have shifted their focus to the domestic market amid escalating geopolitical tensions and increasing trade restrictions.

However, as the generative artificial intelligence technology, which exploded with the launch of US startup OpenAI's ChatGPT in late 2022, gathers momentum, an increasing number of Chinese enterprises have begun to recognize the importance of cloud computing technology, which plays a vital role in promoting the application of AI on a large scale.

I noticed a particular trend: Chinese cloud computing companies are not afraid of the anti-globalization wave. They are still scrambling to expand their footprint in cloud service markets worldwide. I think the reason lies in the explosive demand for computing power resources and data-crunching in the process of training and deploying AI-powered large language models or LLMs.

Currently, computing power is serving as a vital foundation for the development of the digital economy. It is a new engine that can drive data toward realizing its full potential as a factor of production. Computing power also drives the digital transformation of the economy and society. The innovative integration of cloud computing with AI will lower the thresholds for enterprises to acquire and use AI technology.

In recent months, I had the privilege of interviewing many industry insiders in the digital economy domain. Some of them told me accelerating the construction of computing infrastructure like data centers overseas is of great significance. The move, they said, will offer companies from all over the world more cost-effective access to generative AI models, bolster their transformation and upgrading, and allow them to reap technological dividends.

For instance, Alibaba Cloud, the cloud computing unit of Chinese tech heavyweight Alibaba Group Holding Ltd, has announced plans to launch its first cloud region in Mexico and to establish additional data centers in Malaysia, the Philippines, Thailand and South Korea over the next three years. (In cloud parlance, a "region" is a collection of zones — and each zone has high-bandwidth, low-latency network connections to other zones in the same region.)

The new investment to build new cloud and AI infrastructure across key international markets aims to enhance the cloud and AI product suite for its worldwide customers while enhancing global partnerships and fostering AI talent development to nurture future digital expertise.

Huawei Cloud, the cloud computing arm of Huawei Technologies Co, said in May it had launched a cloud region in Egypt, making it the first company to establish a public cloud in the region. It also announced the opening of a cloud data center in Riyadh, capital of Saudi Arabia, last September, as part of its efforts to expand its online service offerings in the Middle East.

"The establishment of next-generation digital infrastructure like intelligent computing centers and data centers in overseas markets will improve efficiency in the use of computing resources and accelerate enterprises' digitalization push," said Xiang Ligang, director-general of the Information Consumption Alliance, a telecom industry association.

He said Chinese cloud computing enterprises should not only speed up the construction of cloud infrastructure abroad, but also enhance innovative capacities in key software applications, so as to better serve global clients.

It is undeniable that Chinese enterprises' expanding presence in overseas cloud service markets might face some challenges and compliance risks in local markets.

The enterprises should learn more about relevant laws and regulations, comply with local evolving regulatory policies, speed up localization efforts, and make products and services that cater to local requirements, said Pan Helin, a member of the Ministry of Industry and Information Technology's Expert Committee for Information and Communication Economy.

Cloud computing has become essentially indispensable, and organizations deploying generative AI services will look to the public cloud, given the scale of the infrastructure required, said Sid Nag, vice-president and an analyst at Gartner, adding the adoption of generative AI will also support the growth of industry cloud platforms.