Land Grab For Asian Cloud Market By Chinese Firms

Alibaba Cloud is expanding into Malaysia, Philippines, South Korea and Thailand.

Alibaba Cloud, the cloud computing arm of Chinese e-commerce behemoth Alibaba, is expanding its footprint outside of China, with plans to add data centers in the Philippines, South Korea and Thailand.

It also launched a new in-house-designed server chip, Yitian 710, to provide better performance and improved energy efficiency so it can compete with Amazon Web Services (AWS), Microsoft Azure and Google Cloud—the top three cloud service providers in Southeast Asia.

Southeast Asia is the world’s fastest-growing adopter of cloud computing, with its cloud market expected to reach $40.3 billion 2025, according to the International Data Corporation.

To provide more-secure, reliable and scalable cloud services, Alibaba Cloud, which already has data centers in Singapore, Malaysia and Indonesia, will add a data center in the Philippines by the end of this year and plans to set up data centers in South Korea and Thailand in 2022. In addition, Alibaba Cloud will establish its first international innovation center in Malaysia.

Although Alibaba Cloud enjoyed a 60% increase year on year in revenue—compared with 29% by AWS, 48% by Azure and 44.7% by Google Cloud—most of its business is still in China, where it faces increasing competition from cloud companies operated by competitors such as Huawei and Tencent.

The loss of TikTok owner ByteDance as a customer outside of China, following pressure from the US government, gives Alibaba Cloud further reason to expand its footprint overseas. Having enjoyed a first-mover advantage at home, it needs to learn how to compete with the Big Tech cloud providers in the US.

In June, as part of Project AsiaForward, Alibaba announced it would set aside $1 billion over the next three years to boost digital skills in Southeast Asia.