(Yicai Global) March 28 -- AtHub, a major internet infrastructure service provider in China, will underwrite Alibaba Group Holding's cloud computing products and services over next six years to help the tech giant diversify its business development.
AtHub has penned a six-year business cooperation agreement with Hangzhou-based AliCloud, the Shanghai-based firm said in a statement.
Athub will underwrite at least CNY435 million (USD64.6 million) worth of AliCloud products or services over the period. The amount will increase annually, growing from CNY10 million (USD1.5 million) to CNY144 million in the final year.
AliCloud will provide all cloud products and services available on its website for AtHub and its clients during the period of cooperation. The firm will also offer technical support to AtHub's new business and assist in building an operations team that specializes in cloud computing.
AtHub will need to pay to make up any shortfalls if it fails to hit the agreed annual sales targets, the statement said. However, this will not greatly impact the company's bottom line since the targets for the first two years are relatively small.
The cooperation will help to strengthen the strategic partnership between the two firms, increase customer loyalty and achieve diversified business development, the statement said. The cooperation could be risky since AtHub's and AliCloud's businesses are quite different in terms of products, technology and staff.
Editor: William Clegg