China, the world's largest trading nation in 2012, has long been a desirable location for outsourcing
labour and services, even within the technology and IT sector where it is not far behind India. The growth of cloud computing providers in Europe and the United States — particularly Amazon and DigitalOcean —
may foretell cloud computing infrastructure becoming a commodity and outsourced to the cheapest provider.
The ever-increasing number of internet users in China (591 million at the end of June 2013) requires the development of home-grown internet infrastructure: hosting web applications and other
content within a target user's own country typically speeds up requests and
improves reliability. The number of internet users in China is greater
than either the United States or Europe.
Stratospheric growth in Chinese cloud hosting
Although the number of web-facing computers in China has grown by 8.3% over the last
year — the majority of this growth has occurred within the cloud hosting
market. Aliyun (云, pronounced 'yun', is the Chinese word for cloud) is the largest cloud computing provider in China in terms of the number of web-facing computers,
and remarkably, Aliyun now has six times more web-facing computers than it did a year ago, reaching a
total of 17,934 in September 2013. Worldwide, only the cloud computing giant Amazon gained
a greater number of web-facing computers.
Although China's cloud computing infrastructure is still in its infancy,
Aliyun's future looks particularly promising, as it is owned by the Alibaba
Group. This group is the largest hosting provider in China, features within the
top 30 hosting providers worldwide, and has already established a strong
internet presence with its better known e-commerce platforms, Taobao and Alibaba.com.
Aliyun now makes up almost 92% of the web-facing computers at Alibaba Group.
Detailed view of Aliyun in terms of hostnames (web sites), active sites, and web-facing computers.
Indigenous market and the Great Firewall of China
Despite the strong growth of the Chinese cloud hosting market, most of the
growth seen by Netcraft is hosting sites aimed at the Chinese market. Hosting content as close to the end-users as possible increases the performance of the web site, and this effect is particularly prominent in China: internet traffic crossing the border can sometimes appear to be slow, unstable, or even blocked, perhaps as a side-effect of blocks enforced by the Golden Shield Project (also
known as the Great Firewall of China). In September 2013, more than half of the domains of websites hosted at Aliyun were in the .cn TLD, around 41% in .com, whilst domains in other ccTLDs appeared to be very rare. Unlike Amazon's global reach, Aliyun's reach appears to be limited to the local market — at least for the time being.
TLD share by domains of websites at Aliyun in September 2013
Obstacles holding back the Chinese cloud
Using cloud hosting in China could make sense for non-Chinese companies
looking to increase their presence in China; however, a number of obstacles remain.
These explain why the Chinese cloud is still mostly indigenous, and is likely to
remain so for some time:
The current obstacles suggest that the cloud is unlikely to be outsourced to China yet.
However, the availability of cloud computers in China is likely to increase to match its rapidly increasing local
demand with competition both from local providers like Aliyun and overseas players like Microsoft and Amazon. Microsoft has collaborated with a partner company in China, 21Vianet, in order to bring its Cloud to China, and is making competitive price plans customised for the Chinese market. Perhaps by following this model, other non-Chinese companies such as Amazon could enter the Chinese market, providing local data centres and support to Chinese-speaking customers within the stricter regulatory environment. Equally, if some red tape were cut and network connectivity improved, Aliyun and other Chinese
cloud providers could be poised to take a larger share of the global cloud computing market.
Netcraft provides information on the internet's infrastructure, including the hosting industry and web content technologies. For information on the cloud computing industry, please see