Chinese Cloud Computing Firms Offer Price, Service Advantage to Beat Amazon in Southeast Asia
Peng Haibin
DATE:  Mar 28 2018
/ SOURCE:  Yicai
Chinese Cloud Computing Firms Offer Price, Service Advantage to Beat Amazon in Southeast Asia Chinese Cloud Computing Firms Offer Price, Service Advantage to Beat Amazon in Southeast Asia

(Yicai Global) March 28 -- China's cloud computing companies are actively competing for the Southeast Asian market as they don't want to miss out on the opportunities offered by booming internet services in this populous part of the continent.

China's internet powerhouses such as Alibaba Group Holding Ltd. and Tencent Holdings Ltd., as well as leading domestic vendors like Shanghai UCloud Information Technology Co., have turned their eyes on Southeast Asia and vie for a larger market share in the region.

The emerging internet companies and businesses in Southeast Asia are undergoing digital transformation and aim to increase business agility and launch new online businesses through cloud, which has created a high market demand for cloud computing services.

Presence in Singapore

China's cloud computing companies first make sure they have a presence in Singapore.

When UCloud considered the layout in the Southeast Asian market, it first established a data center in Singapore in 2016. Since then, it opened another data center in Thailand due to increased demand, Hua Kun, chief operating officer of UCloud, told Yicai Global.

Tencent Cloud's Singapore data center officially opened its service in August 2016, which was one of its earliest overseas data centers operated by the company following its Hong Kong data center which opened in 2014. Alibaba Cloud, which takes the largest domestic market share, also made regional deployment in Singapore in 2015 and set up an overseas headquarters there.

Singapore's population is only 5.6 million. Local demand is not the only consideration for Chinese cloud computing companies to make their presence there. What Chinese cloud computing firms value is that Singapore has brought together the most intensive financial data and cloud data in the Asia-Pacific region, which is a bridgehead for them to open to the Southeast Asian market.

Building More Regional Centers

However, the establishment of regional headquarters in Singapore was not enough to satisfy China's cloud computing firms' business interests. They began to extend their business presence into other parts of the region.

"As a hub, Singapore's advantages are that it can easily access to the whole region, but the disadvantage is that it is not local enough for the entire Southeast Asia region. So, it was necessary to establish new data centers locally," Hua said. UCloud's network tests show that network delay between Singapore and Indonesia was not satisfactory, which meant that local users in Indonesia did not get a good app experience.

This is why UCloud conducted a free beta test of its data center in Jakarta, Indonesia, this month, following its opening of two data centers in Singapore and Thailand.

Similarly, Alibaba Cloud Malaysia unveiled its services last October and has quickly become an international cloud service vendor providing cloud computing and artificial intelligence services in the country. This was the second major zone that Alibaba Cloud provided its service in Southeast Asia after Singapore.

UCloud is ready to further penetrate the Southeast Asian market for future considerations. One option is to build more data centers outside Singapore and Thailand. Construction speed of these data centers should be faster than those of Tencent Cloud and Alibaba Cloud, says a competitive Hua.

Tough Competition

In Southeast Asia, local competitors are generally weak. In addition to their domestic peers, the real rivals of China's cloud computing companies are Amazon Web Services Inc. and Microsoft Azure developed by Microsoft Corp.

In Singaporean market, services of UCloud and Alibaba Cloud are hardly any different because it is really difficult to find differences, Hua claims.

On the other hand, compared to Microsoft and Amazon's cloud business deployment in Southeast Asia, Chinese manufacturers do not have the first-mover's advantage. Price is a competitive means for Chinese companies, and Hua believes this is a latecomer's disadvantage for Chinese players.

"Amazon promoted price cuts before, but its price is still not cheap," Hua said, adding that Chinese vendors can offer 50 percent cheaper than Amazon, and at least UCloud's price is 50 percent lower than that of the U.S. firm.

Another huge advantage of Chinese companies is that they compete hard and compete like Huawei Technologies Co. to gain users, Hua said.

As the world's largest cloud computing service provider, Amazon's cloud services are more standardized. "Services are very expensive for foreign players because their labor costs are more expensive," Hua told Yicai Global.

Now Chinese companies compete harder to gain market share. First, their services are cheap enough. For example, Ericsson's equipment was very expensive at first when it entered China. After Huawei made it localized, the price went down. Second, they have service advantage. Chinese companies can be on call 24/7 and meet customers' needs, he added.

In all of Tencent Cloud's overseas data centers, resident engineers are available to respond to demand 24/7, Tencent Cloud told Yicai Global.

"Chinese companies compete hard and Chinese startups compete even harder," Hua added concerning this new business front on the continent.

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Keywords:   Cloud Computing,Regional Service Center,Southeast Asia,Alibaba,Tecent,UCloud