The Chinese Internet Data Center Market generated a revenue of USD 29.98 billion in 2020, and it is expected to reach USD 155.64 billion by 2026, registering a CAGR of approximately 32.53% during the forecast period (2021-2026). At the beginning of 2020, when China was under the national coronavirus pandemic prevention and control period, allied governments, enterprises, and institutions were deploying a large number of measures (on the scientific and technological pandemic prevention front such as remote office, remote education, e-commerce life, etc., amid cultivating an emerging customer needs. This has acted as a sole driver for China's IDC (Internet Data Center) industry at a large scale.
- China is leaping ahead on the global scale for the construction of data centers, majoring in the increasing demand from enterprises to scale up their data centers operations. Enterprises in the region seek reliable and stable data services for the application of IoT, 5G, and other AI-driven spurs demanding high internet computation power. For instance, global tech giants such as Huawei Technologies Co and Apple Inc are stepping up efforts to build data centers in Guizhou province due to its ample power resource and mild climatic condition.
- The country's stride into fifth-generation mobile telecommunications technology and further coupled with the thriving e-commerce sector leveraging the potential of internet data centers, thereby enabling IDCs viable investment for the industry stakeholders. Further, the trend is supported by the emergence of powerhouses such as Tencent Holdings and Huawei Technologies, among others, whose growth drives the construction of IDC facilities in the region.
- The country capitalizes on the demand for computing power and continues to dominate the list of the world's fastest supercomputers by number. According to semiannual ranking, china reported 219 systems. For instance, Dawning Information Industry Co Ltd, a leading supercomputer manufacturer, reported the construction of innovation center in Tianjin to leverage the growing demand for computing power concerning the commercial applications and is expected to be completed by 2021.
- Additionally, the region is encouraging the adoption of internet technology in the private and states businesses and is thereby driving disruption in the economy and creating technological leaders. For instance, the proliferation and adoption of digital payment systems by private and public businesses drive the demand for IDC infrastructure. Further, it is expected that with the increasing digital transformation of the region, demanding more information processing would drive the growth of data centers.
Key Market Trends
Foreign Investment to Drive the Market Growth
- In the market scenario, the internet data center projects in the region have started to attract ever-increasing investments from investors outside of China. In addition, there have been robust development initiatives taken by the local government in Beijing for propelling digital transformation within the province. There has been a growth in foreign direct investments with companies such as GE Healthcare, AstraZeneca, and Pony.ai have established their regional or R&D capabilities in Beijing. Despite the pandemic, there has been a consistency in FDI used in the province.
- Also, owing to the regulations led by the government, foreign-invested companies are not currently allowed to apply for IDC Licenses. However, leveraging partnerships with Chinese JVs partially owned by Hong Kong or Macao companies can meet the requirements through Mainland and Hong Kong/Macao' CEPA.
- According to a recent report published by the China Academy of Information and Communications Technology, as of March 2020, around 13 JVs including major telecommunications service providers based in Hong Kong and Macao such as CITIC Telecom, and PCCW/HKT announced the establishment under CEPA route had obtained IDC Licenses in China. Also, few foreign companies such as Atos, NTT, and SAP have established operations to set up JVs with Chinese partners leveraging subsidiaries to obtain IDC licenses.
- Additionally, global technology companies such as Microsoft have announced the Technical Support Model by partnering with 21Vianet Group, to provide its cloud services in mainland China. Under the Technical Support Model, foreign investors are allowed to licenses their brand and technologies to the Chinese IDC License holder and deliver technical maintenance and support services.
- Furthermore, the company in June 2020, attracted funds from Blackstone, a global investment firm. The company received approximately USD 150 million investment, which will further strengthen the company’s footprint in wholesale and enterprise data center markets, andreinforce its position in China’s hyper-growth data center market.
Strong Growth in Internet-of-Things (IOT), Artificial Intelligence, and Mobile Internet Penetration to Drive the Market Growth
- 5G adoption, IoT, and AI are meant to be an upside opportunity for data centers. By the end of June 2020, as per China Mobile and China Unicom, at least 108 million users registered 5G bundles in China. And, close to 800,000 5G towers were built in 2020. With the adoption of 5G, the consumption of higher resolution videos, cloud gaming, and self-driving cars are expected to lift up the demand for data and thereby IDCs in the country.
- Artificial intelligence, on the other hand, witnesses companies as a crucial factor in the data centers industry as they need lots of data to train their models. However, the compute for AI is difficult as lacking optimized hardware. Increased investments in AI startups and the performance of AI training tasks are directly related to the improvement of related semiconductor equipment. With China as the epicenter of semiconductor-based innovations, the trend is likely to augment the demand for AI application adoption currently.
- Across 2020 and at the National People's Congress, a digital infrastructure public spending program was emphasized. Currently, building 'new infrastructure has become a top development priority for China. And, since the COVID-19 outbreak, the country has witnessed the potential of technologies like artificial intelligence, big data, and cloud computing in combating and adjusting to new normal.
The China Internet Data Center Market is fragmented with prominent players, including Internet giants such as Alibaba Group Holding Ltd, China Telecommunications Corporation, and China Mobile International. Major foreign investments and government impulsion lead the market. The prominent vendors in the market owing the market saturated for expanding their reach in the establishments market to maintain their competitive position.
- March 2021 - 21Vianet Inc. announced its acquisition of a data center in Beijing which houses around 2,000 ready-to-use cabinets. The aim of the acquisition is to cater to large enterprise customers who locate mission-critical data processing operations in Tier 1 cities to achieve ultra-low latency.
- August 2020 - Alibaba Group Holding Ltd introduced three hyperscale data centers in Hangzhou, Nantong, and Ulanqab. However, the Hangzhou data center is equipped with Alibaba Cloud calls, which may reduce energy consumption by 70%. Furthermore, its Nantong data center leverages its uninterruptible power supply (UPS) solution, which improves the electrical efficiency of these data centers.
- The market estimate (ME) sheet in Excel format
- 3 months of analyst support
This product will be delivered within 2 business days.
Table of Contents
1.2 Scope of the Study
4.2 PESTEL Analysis - China Internet Data Center Market
4.3 Market Drivers
4.3.1 Strong Growth in Internet-of-Things (IoT), Artificial Intelligence, and Mobile Internet Penetration
4.3.2 Significant Growth in E-commerce and Hi-tech Industries
4.3.3 Ongoing Trend of Switching to Multi-tenant Environment by Corporates
4.4 Market Challenges
4.4.1 High Barriers of Entry due to Significant Capital Requirements and Long lead time to Build Critical Connectivity Access to Multiple Carriers
4.5 China Internet Data Center Market Indicators (To include coverage on critical factors such as Customer Portfolio, Location, Business model, among others, for evaluating IDC portfolio)
4.6 Impact of COVID-19 on the China Internet Data Center Market
8.1.1 Colocation Services (Rack, Cabinet, etc.)
8.1.2 System Maintenance Services (Data Backup, System Configuration, Failure Recovery, etc.)
8.1.3 Management Services (Bandwidth, Flow Analysis, Intrusion Detection, Load Balancing, etc.)
8.1.4 Others Service Types
8.2 By End User/Customer
8.2.2 Banking and Financial Organizations
8.2.4 IT & Telecom
8.2.5 Other End users
8.3 By Province
8.3.5 Rest of China
9.1.1 Alibaba Group Holding Limited
9.1.2 China Mobile Limited
9.1.3 China United Network Communications Group Co. Ltd.
9.1.4 China Telecommunications Corporation
9.1.5 21Vianet Group
9.1.6 GDS Holdings Limited
9.1.7 Wangsu Science & Technology Co. Ltd.
9.1.8 Beijing Sinnet Technology Co. Ltd
9.1.9 Shanghai AtHub Co. Ltd.
A selection of companies mentioned in this report includes:
- Alibaba Group Holding Limited
- China Mobile Limited
- China United Network Communications Group Co. Ltd.
- China Telecommunications Corporation
- 21Vianet Group
- GDS Holdings Limited
- Wangsu Science & Technology Co. Ltd.
- Beijing Sinnet Technology Co. Ltd
- Shanghai AtHub Co. Ltd.