Data center and hosting services are set for a huge boost in China

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As Chinese enterprises look to upgrade their infrastructure and implement new digital services, the demand for cloud storage in the country is growing significantly, new figures have claimed.

A new report from GlobalData estimates the total addressable market size of the Chinese data center and hosting services, when it comes to enterprise spending opportunity, will grow at a compound annual growth rate (CAGR) of 6.8% between 2020 and 2025.

Besides infrastructure upgrades and new services, Chinese businesses are also looking to adopt more IoT, wearables, AI, 5G, as well as to use more big data and analytics services, all of which demand significantly more of superior computing capabilities. 

Government seeks modernization

These investments are motivated by the “widespread adoption of remote working, e-commerce, mobile payment services and other digital solutions,” argues Samrat Volam, Technology Analysts at GlobalData.

The government also plays a key role in the rising popularity of data center and hosting services in China, as new policies seek to better support the digital economy and new infrastructure development, GlobalData also said.

The Chinese government, Volam adds, wants to modernize the country’s factories further “by promoting the adoption of advanced technology strategies like industrial Internet, smart manufacturing to robotics and AI.”

Drilling deeper into where Chinese enterprises prefer to invest their money, the report claims application hosting and data center services make up most of enterprise spending. However, colocation services are expected to grow the fastest, with 9.5% CAGR, by 2025.

While local Chinese companies will be making most of these strategic data center investments in the country, global leaders in the market will not be sitting idly, GlobalData confirmed. Earlier this year, in March, Microsoft announced a new Azure China data center region in Hebei, which will go live next year, while in April, Princeton Digital Group took up $230 million in debt, to expand its Chinese operations. 

During the same month, CapitaLand (a Singapore-based real-estate group) purchased a 55MW facility in China for $564.5 million, announcing its first hyperscale data center campus.

While large enterprises will make up most of the spending, the combined spending opportunity of smaller organizations will grow at a faster CAGR of 6.8%, Volam concluded.

Sead is a seasoned freelance journalist based in Sarajevo, Bosnia and Herzegovina. He writes about IT (cloud, IoT, 5G, VPN) and cybersecurity (ransomware, data breaches, laws and regulations). In his career, spanning more than a decade, he’s written for numerous media outlets, including Al Jazeera Balkans. He’s also held several modules on content writing for Represent Communications.