Caixin
Oct 15, 2019 07:17 PM
BUSINESS & TECH

China’s Fast-Growing Cloud Computing Sector Still Lags: Report

A cloud computing industry base in Zhongguancun, Beijing, July 29, 2019. Photo: VCG
A cloud computing industry base in Zhongguancun, Beijing, July 29, 2019. Photo: VCG

Is China catching up with the U.S. in cloud computing? The answer is “not yet” according to a report by the International Institute of Technology and Economy (IITE).

China’s cloud computing market grew 39.2% year-on-year in 2018 to a total of 96.28 billion yuan ($13.6 billion), but that was just 8% the size of the U.S. market last year, the report by the IITE says. The IITE is a nonprofit research organ affiliated to the State Council, China’s cabinet.

Cloud computing describes the use of a network of remote servers to store and process data.

Despite the rapid pace of growth, China still lags well behind developed countries in its use of cloud computing. In 2018, about 40% of Chinese companies were using cloud computing services, compared to over 85% in the U.S. and around 70% in the European Union, said IITE deputy chief Qu Shuangshi at the Saturday release (link in Chinese).

The main clients for these services in China are internet companies — making up 60.3% of the sector’s sales.

In industries such as transportation, logistics, finance, telecommunications, energy, manufacturing, governmental services, and health care, over 90% of companies are not using cloud computing services, the report said.

Several people speaking at the report’s launch event said the findings are indicative of a larger problem of companies and government bodies failing to embrace modern information technologies such as cloud computing.

Xiao Yi, chief technology officer of Huawei Cloud’s China operations, said that many entities lack sufficient top-down planning to execute digital transformation projects. For instance, she said, often budgets are allocated on a regional basis, which makes it difficult for institutions to plan and build a unified data-sharing structure.

Luan Dalong, researcher at Beijing-based think tank the Center for China and Globalization, said that aging leaders and outdated management are also factors.

Contact reporter Isabelle Li (liyi@caixin.com)

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