Cloud technology providers join the global march

Amid the growing dynamics of the globalization of Chinese companies’ operations, domestic cloud service providers are also gradually trying to enter international markets.

Tencent Cloud’s international business has seen double-digit growth over the past three years, with impressive results in Southeast Asia, Japan, the Middle East and Europe, said Li Qiang, vice president of Tencent.

Li added that Tencent Cloud’s infrastructure covers 21 regions across five continents, operates over 3,200 global acceleration nodes, and offers solutions for various sectors such as internet, gaming, finance, tourism, automotive, and retail.

“Going global” has become one of the most important strategies of Tencent Group and Tencent Cloud, he added.

Li said the tech giant will also accelerate the international expansion of its AI technology.

He made the comments in an interview with China Daily ahead of the Tencent Global Digital Ecosystem Summit 2024, which kicked off on September 5 in Shenzhen, Guangdong province.

The accelerating pace of cloud internationalization is closely tied to the overall growth of Chinese companies going global. In 2023, the amount of Chinese capital going global increased 11 percent year-on-year, with a 23 percent increase in the number of companies, according to consulting firm Bain & Company.

The mode of internationalization is also changing, moving from product launch to platform internationalization, in line with the overall system of Chinese experiences and practices.

According to statistics released by the Ministry of Commerce in 2022, among the companies that went global in the last five years, the retail and manufacturing sectors accounted for the largest share, while the IT services and software sectors recorded the fastest growth.

But Li found that Chinese companies are facing new challenges in their efforts to globalize because of rising barriers to international trade. One problem is how to effectively implement the high digital standards of their factories in China in emerging economies.

“More and more companies are considering local recruitment and creating a supply chain, which is leading to an increase in demand for top-notch software services in management processes,” he added.

One example is Tencent’s partnership with automaker GAC Group. Tencent built the latter’s digital infrastructure system tailored to Southeast Asia and mass-produced the vehicle internet for the Thai market this year.

As of late June, Tencent was providing overseas cloud services to more than 30 automakers and mobile technology companies.

In addition to partnering with Chinese companies, Li is also confident of attracting customers from overseas, a market segment that has already seen rapid growth.

Sun Wei, a senior consultant at market research firm Counterpoint, said the global expansion of such companies is focused more on Asia, due to geopolitical tensions and stricter data control policies elsewhere.

Sun said that one of the main strategies of their expansion at this stage is price reduction. Taking Alibaba Cloud as an example, she said that since March, they have implemented two significant rounds of price cuts in domestic and overseas markets.

She added that they are “also expanding their technology offerings with an increasing focus on offering value-added services such as AI-powered cloud solutions, specialist enterprise services across vertical markets, and strong engineering capabilities to enable rapid scalability to differentiate themselves from Western competitors.”

AI infrastructure and technology have become a new driver of international expansion for Chinese software service providers. Alibaba Cloud and Huawei Cloud unveiled their AI “going global” initiatives in May this year and November last year, respectively. Alibaba Cloud is also investing in new data centers in five countries around the world, emphasizing AI infrastructure development.