As Chinese enterprises look to upgrade their infrastructure and deploy new digital services, the demand for cloud storage in the country is growing significantly, new figures say.
A new report from GlobalData estimates that the total addressable market size of China’s data center and hosting services, when it comes to business spending, will grow at a compound annual growth rate (CAGR) of 6.8% between 2020 and 2025.
In addition to infrastructure upgrades and new services, Chinese companies are also looking for more IoT, wearables, AI, 5G and the use of more big data and analytics services, all of which require significantly more from superior computing capabilities.
Government strives for modernization
These investments are motivated by the “widespread adoption of remote working, e-commerce, mobile payment services and other digital solutions,” said Samrat Volam, Technology Analysts at GlobalData.
The government also plays a key role in the rising popularity of data center and hosting services in China, as new policies aim to better support the digital economy and the development of new infrastructure, GlobalData said.
The Chinese government, Volam added, wants to further modernize the country’s factories “by promoting the adoption of advanced technology strategies such as industrial internet, smart manufacturing to robotics and AI.”
Taking a closer look at what Chinese companies prefer to invest their money in, the report claims that application hosting and data center services account for the largest share of business spending. However, colocation services are expected to grow fastest by 2025 at 9.5% CAGR.
While local Chinese companies will make most of these strategic investments in data centers in the country, global leaders in the market will not sit still, GlobalData confirms. Earlier this year in March, Microsoft announced a new Azure China data center region in Hebei to go live next year, while Princeton Digital Group took on $230 million in debt in April to expand its Chinese business.
In the same month, CapitaLand (a Singapore-based real estate group) purchased a 55 MW facility in China for $564.5 million, announcing its first hyperscale data center campus.
While large enterprises will account for the bulk of spending, the combined spending opportunity of smaller organizations will grow at a faster CAGR of 6.8%, Volam concluded.