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Cloud Computing in China

29 June 2018 Leave a comment

In the last decade, cloud computing has become an important information support technology in different countries. According to research by Synergy Research Group shown in the following figure, the global cloud computing market has been dominated by a few big players, and most of them are from developed countries especially the US. The Chinese firm Alibaba Cloud is catching up and competing with these international technology giants. We explain this phenomenon from the following three aspects.

Cloud Infrastructure Services – Market Share Trend
(IaaS, PaaS, Hosted Private Cloud)

Market Drivers

Since the global economic crisis in 2008, the business sector has been looking for ways to reduce costs. Cloud computing can assist this. It enables the provision of services with five essential characteristics: on-demand self-service, broad network access, resource pooling, rapid elasticity, and measured service [1]. Using cloud computing technology, companies do not need to invest heavily in infrastructure when starting a business or offering new services. They only need to pay cloud service providers for what they will use, and do not need to buy expansive IT equipment, which normally involves a high fixed cost plus operational costs related to maintaining, monitoring, and managing IT systems.

Simultaneously, in recent years we have witnessed the rapid development of (mobile) Internet and wide application of Internet-based technologies. In China there exists a huge online and mobile user population with tremendous purchasing power. The business sector calls for technologies like cloud computing to process ubiquitous and intellectual information [2]. Furthermore, cloud computing is characterized by low cost, high efficiency, and environmental benefits, which satisfies the sustainable development principle.

Technology Innovation and Accumulation

Cloud computing enables the integrative use of different existing technologies, including broadband communications, Internet, distributed computing, distributed database, virtualisation technology and distributed processing technologies. These technologies form the basis of cloud computing as an innovative mode of computing (for more information, refer to [3] and [4]). Obviously, dominant technological giants from developed countries have advantages in this field for their accumulated know-how in different technologies. To compete with them, Alibaba as a latecomer has had to innovate in technologies, and build up experience in providing services.

In February 2009 Alibaba Cloud developed its own computing operating system called Apsara, and Alibaba Cloud was the first company to be able to provide 5K cloud computing capability in the world. By November 2016, Alibaba Cloud was a global leading player in cloud computing, and Apsara was selected as one of the 15 most representative scientific and technological innovations of the World Internet. To make these achievements, Alibaba Cloud has engaged in years of collaboration with private companies e.g. Taobao, a Chinese online shopping platform, and the public sector e.g. the Chinese state-controlled railway sector in operating its online ticketing service.

Policy Support

Scholars have confirmed that governments could play an important role supporting companies in developing countries catch up technologically [5][6]. The Chinese government has taken measures to promote the Chinese cloud computing industry. In 2010, the government backed the formation of industrial alliance China Cloud Computing Technology and Industry Alliance (CCCTIA). Significant financial support has been provided. For example in October 2011, a grant of 1.5 billion RMB (c.US$225m) was given to cloud computing pilot demonstration projects. Also a tax allowance was provided for cloud-related R&D initiatives. To set an example for other organisations, different government sectors purchased cloud services from private companies like Alibaba Cloud.

When the cloud computing industry entered into the expansion stage, the government began to get involved in standardisation of technologies and services. The Decree No. 05 issued by the State Council in 2015 was set to regulate the market and ensure its development. At present the cloud computing industry in China has entered into the mature stage, and Alibaba Cloud has been recognized for its high-quality, low-cost services. The Chinese government is pushing hard for the integration of cloud computing and other emerging industries like big data and artificial intelligence. This signals that Chinese companies will be supported to take a lead in these fields in the future.

Authors: Jiaying Li, Ping Gao

Reference

[1] Fortiş, T.-F., Munteanu, V. I., & Negru, V., 2012. Towards a service friendly cloud ecosystem. In Proceedings of the 11th IEEE International Symposium on Parallel and Distributed Computing (ISPDC), pp. 172-179.

[2] Mell, P. & Grance, T. 2010. The NIST definition of cloud computing. Communications of the ACM, 53, 50.

[3] Buyya, R., Yeo, C. S., Venugopal, S., Broberg, J., & Brandic, I., 2009. Cloud computing and emerging IT platforms: Vision, hype, and reality for delivering computing as the 5th utility. Future Generation Computer Systems, 25, 599-616.

[4] Zhang, Q., Cheng, L., & Boutaba, R., 2010. Cloud computing: State-of-the-art and research challenges. Journal of Internet Services and Applications, 1, 7-18.

[5] Gao, P., & Yu, J., 2014. Has China caught up in IT? Communications of the ACM, 53 (8), 30-32.

[6] Landini, F. & Malerba, F., 2017. Public policy and catching up by developing countries in global industries: a simulation model. Cambridge Journal of Economics, 41, 927-960.

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