Merging cloud, big data and smart cities

During a recent Saturday, Shenzhen was preparing for the strongest thunderstorm in years to strike the city.

Less than 24 hours later, China's information technology hub in Guangdong province was deluged by torrential rain and hail.

But for Edward Tian it was another bright day for his business.

Tian, founder and chairman of China Broadband Capital Partners LP, is probably the best-known venture capitalist in the country and one of the first players in China's big data business.

China Broadband Capital recently set up a cloud computing data center in Shenzhen.

"Data is the most valuable asset in the 21st century. We can build a long industry chain based on data-related businesses such as analytics, information security and statistics exchange," Tian said during the opening of the Shenzhen data center on March 30, which was built in less than six months.

Data centers are the fundamental hardware infrastructure for cloud computing technology. Enterprises, governments and individuals can store all kinds of data and let the powerful data-processing computers organize and analyze the information.

Data centers then send back the results to any devices its customers request, making sure the information is shared by the right person on the right devices.

The idea of storing data on a centralized platform will improve efficiency, reduce cost and - most of the time - limit security risk, says Jouni Hakanen, China head of technology consulting and IT strategy at global consultancy firm Accenture Plc.

China embarked on a massive data construction project last year after the central government placed its bets on information technology to lift the slowing economy.

Demand for data centers has increased because major information consumption boosters, such as cloud computing and mobile Internet, are powered by data analytics and storage services.

China is also fast becoming one of the world's largest spenders on cloud computing facilities, overtaking even the United States and the European Union.

"Unlike other economies, China spends half of its investment on hardware including networks and other infrastructure," Hakanen says, adding that Western counties are spending less on hardware.

"Let's not forget that a well-functioning cloud computing system also requires considerable investment in software," he says.

Accenture believes that although infrastructure investment will remain robust in China, more money needs to be spent on network building and smart city initiatives.

State-owned enterprises and governments are the most promising customers for the nation's booming cloud industry.

The Big Three telecommunication carriers, China Mobile Ltd, China Telecom Corp Ltd and China United Network Communications Group Co Ltd, are building their own data centers in inland areas such as Inner Mongolia autonomous region and Guizhou province.

In February, officials from Guiyang, capital city of Guizhou, indicated that they plan to make cloud computing a new "pillar industry". The southwestern city was known for its Soviet-era military industries such as fighter plane manufacturing.

But the mountainous province has also been a long-time research and design base for the People's Liberation Army. The heavy industry has largely depended on military-related factories since the 1960s.

"The cloud computing infrastructure coming up in Guiyang will be the backbone of the emerging big data industry," says Mao Youbi, vice-mayor of Guiyang.

The city also hopes to lure more big data companies with its better natural environment and lower living costs than in Beijing, Shanghai and Shenzhen.

"Although economically developed cities such as Beijing and Shanghai still hold some technology advantages, Guiyang could become a major regional hub in big data because it is the only province that has a clear development blueprint for the sector," says Zhao Guodong, secretary of Zhongguancun Cloud Computing Industry Alliance, a Beijing-based industry association.

In 2013, the Big Three telecom carriers agreed to build regional data centers in Guiyang because of the cheaper land and power prices.

"Guiyang may also lead the country's statistics analytics service if local officials have an open-minded vision in data disclosure," says Zhao, adding that the turnover of China's big data market is more than 10 times bigger than that of the US, without revealing actual numbers.

"I am optimistic about the cloud computing and big data industries in China because of the high smartphone penetration rate in the country," Zhao says.

China is the world's largest buyer of smartphones. It had roughly 500 million mobile Internet users in 2013.

Similar developments are taking place in North China's Inner Mongolia autonomous region. The local government has said that it plans to build the largest cloud computing industry park in China by equipping 2 to 3 million servers before 2015. Hohhot, its capital city, is building nine major data centers for cloud services with investment exceeding 70 billion yuan ($11.3 billion).

In Yangquan, Shanxi province, online search giant Baidu Inc's 76 million yuan data center started operations in March.

Analysts believe that apart from favorable operation costs, the natural environment is another critical reason for these regions winning data center projects.

gaoyuan@chinadaily.com.cn