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China Sees Hyperscale Data Center Influx

January 10, 2017

The U.S. remains the world leader in cloud and Internet data centers, but China is gaining on us.

Indeed, a recent Data Center Dynamics article says China accounts for 8 percent of the world’s hyperscale data centers, with recent openings of such facilities there by such industry giants as Alibaba, Amazon, and Google. That makes sense, given that 710 million people were online in China as of June 2016 – making this the largest plugged-in population in the world.

However, while hyperscale data center growth continues in China, getting approval for and building new facilities is often more difficult here than in some other parts of the world. That’s due to the heavily regulated environment, and nebulous rules, in place in China.

For example, as the DCD coverage notes, the Chinese government won’t allow a foreign company to have a majority stake of a data center in

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the country. So some companies are doing it via partner relationships. For example, IBM builds data centers in China for Chinese companies, and it otherwise works through its long-standing partnership with Tencent. Meanwhile, Microsoft partners with Chinese company Baidu.

“If you speak to Chinese nationals, even they will say that doing business in China is not easy,” wrote Teddy Miller and Dan Thompson in a July piece for the 451 Research blog. “There are simply a lot of hoops to jump through, especially for [multitenant data centers] and cloud service providers, and if the company is owned by a non-Chinese entity, things get even more complicated.”

However, China’s growing middle class, 451 Research notes, is driving a technological revolution that in some ways surpasses what’s happening in the U.S. And that could make the hassle well worth the effort, Miller and Thompson say.

A world hyperscale data center market report published in September by Allied Market Research says that North America in 2015 was the leader in this realm, followed by Europe and Asia Pacific. Allied Market Research forecasts this space will reach revenue of $71.2 billion by 2022.

“Increasing adoption of hyperscale data centers owing to technological advancements, such as open compute projects and energy efficiency, has changed the business models for various end users,” writes Allied Market Research. “Hyperscale data centers are utilized across various industries, namely IT and telecom, banking, financial services and insurance, government utilities, healthcare, energy, manufacturing, and others (retail, education). With rise in cloud computing, social media, big data, online gaming, and other online applications, there is a constant need for enhanced IT infrastructure that caters to the ever-increasing demand for resources; a factor that further supplements the demand for hyperscale data centers.”

Edited by Alicia Young

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