As Chinese companies look to upgrade their infrastructure and implement new digital services, the demand for cloud storage in the country is increasing dramatically, new figures show.
A new report from GlobalData estimates that the total addressable market size of Chinese data center and hosting services, in terms of business spending opportunities, will grow at a compound annual growth rate (CAGR) of 6,8% between 2020. and 2025.
In addition to infrastructure updates and new services, Chinese companies are also looking to adopt more IoT, wearable devices, AI, 5G, as well as use more big data analytics and digital services, all of which require much higher computing capacity.
The government wants to modernize
These investments are driven by "the widespread adoption of remote work, e-commerce, mobile payment services and other digital solutions," said Samrat Volam, technology analysts at GlobalData.
The government is also playing a key role in the growing popularity of data centers and hosting services in China, as new policies seek to better support the digital economy and the development of new infrastructure, GlobalData also said.
The Chinese government, Volam adds, wants to further modernize the country's factories "by encouraging the adoption of advanced technology strategies such as the Industrial Internet, smart manufacturing, robotics and artificial intelligence."
Further exploring the areas in which Chinese companies prefer to invest their money, the report claims that application hosting and data center services make up the largest share of business spending. However, colocation services are expected to experience the fastest growth, with a CAGR of 9.5%, by 2025.
While local Chinese companies will make the majority of these strategic investments in data centers in the country, global market leaders will not sit idly by, GlobalData has confirmed. Earlier this year, in March, Microsoft announced a new Azure China data center region in Hebei, which will come online next year, while in April, Princeton Digital Group incurred $ 230 million in debt to expand its operations in China.
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 companies will account for the majority of spending, small organizations' combined spending opportunities will increase at a faster CAGR of 6,8%, Volam concluded.