China and Cloud Infrastructure

China, a country associated with taking technological leaps, is lagging in the cloud infrastructure. While some analysts might view recent reports of China’s recent cloud growth as impressive, the issue is more complex than that. It’s true that China spent around 14 percent of its total IT budget to cloud services in 2017, double the amount spent four years earlier. China nonetheless falls behind its global peers in overall cloud expenditures. The United States accounted roughly. 29% of the total IT budget in 2017 into cloud infrastructure, more than twice the investment in 2013.

In China, a large portion of companies continue to rely on local computing and their own infrastructure. The problem is the hesitation of investment in IT initiatives, which includes automation or advanced analytics. Some investors see this as a major factor behind the low digitization rates in China.

Change might appear soon, Corporations and the government has taken note of the cloud’s importance and have committed to increase growth in infrastructure through an action plan issued by the Chinese Ministry of Industry and Information Technology. The goal is to increase the national industry 2.5 fold from 2015 levels by 2019.2 Chinese companies currently show a preference for the private cloud, and a few analysts estimate more than a 20 percent CAGR for the next three years in that part of cloud infrastructure.

Keith Knutsson of Integrale Advisors commented, “Change is afoot in the cloud infrastructure market; industry leaders need to be careful not to be leapfrogged and continue developing strong initiatives to grow in emerging markets.”