The rise of Chinese data centers

//The rise of Chinese data centers

The rise of Chinese data centers
By Oliver Jones, CEO Chayora

According to the market research firm Technavio, the data center market in China is expected to witness exponential growth and will post an impressive CAGR of nearly 13 percent over the next four years. Moreover, the demand for public cloud storage is expected to grow, which will also fuel the expansion of the nation’s data center market.

The Chinese telecommunications market, the largest in the world, is undergoing a rapid transition. With China’s scale and ceaseless drive to innovate, the telecom industry could become the key to the nation’s continued growth as the world’s leading financial market. With close to 1.3 billion mobile-phone owners and 700 million Internet users, China is the most populous digital market.

The country is also making real strides in becoming an advanced telecommunications market. Internet speeds have doubled after China completed a two-year project to increase the number of national internet hubs from three to 10. Meanwhile, the Chinese government has made steps to open the telecom industry to private companies and supported the development of technologies related to the Internet of Things (IoT) to boost economic growth. Indeed, the country already possesses the world’s largest M2M market with significant growth evident in the connected car market.

Although there is still much need for expansion and improvement, China has been able to build a substantial national telecom infrastructure, with fiber optic cables crisscrossing the nation. China has built the largest next-generation network (NGN) in the world, the IPv6-based ChinaNet Next Carrying Network (CN2), and is rapidly increasing broadband deployments. The major carriers in China have been vigorous in their embrace of IP and have been busy building the infrastructure to support a wide range of IP services. With its huge fixed and mobile subscriber bases, it comes as no surprise that China already has the largest number of VoIP users in the world.

According to research conducted by the US Department of Energy three years ago, China had five percent of the world’s data center space valued at $24 billion. The research also indicated that China’s data center market was growing 20 percent annually and capturing approximately 7 percent of total global investment in data center operations. Shanghai, Shenzhen and Hong Kong have the most data centers and total floor space, but Beijing’s data center market is growing at nearly double these cities’ rate. While there has been incremental development in the rest of the country, new renewable energy laws, high real estate prices in top-tier cities and directives from the central government could combine to bring a spike in new data center development to tier-2 and tier-3 cities.

Most significantly, China is a market that is experiencing an immense surge driven by multinational enterprises and international service providers that seek to establish a presence there. Paradoxically, the country remains largely untapped by private operators and external hyper-scale companies.

Don’t miss the opportunities

To be certain, the scale of the Chinese data center market is well known and recognized by most international players. However, the opportunities associated with the innovative and adaptive culture of Chinese businesses are often overlooked. China has repeatedly leapt generations in product and service development across power, telecommunications and technology, and this capability offers entrants to China with new options to transform more traditional and legacy bound data center environments.

That being said, there remains the need for a well-established liaison to enable international companies to successfully navigate the growing Chinese data center industry. Such a data center provider would ensure the most reliable route to business engagement in the region, help overcome obstacles, and acquire the necessary infrastructure to deliver and execute with the same speed and reliability that is common in other parts of the world.

Chayora is developing data center campus locations in key locations across China, including Shanghai, Tianjin, southern Jiangsu and Hangzhou. Shanghai has live data center services and offers significant scale, international-standard facilities and a range of options for international customers and leading Chinese technology businesses, including build-to-suit, assured scalability and wholesale colocation.

In China, optimizing the blend between understanding local regulations, laws and policies and assuming international standards is vital, however the tendency to compromise can be a very ill-advised decision. Any entry strategy needs an expert developer and operator to bridge the knowledge gap.