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Finding opportunities in the China cloud

Most major Chinese cities have established cloud development offices, with the focus on attracting and nurturing cloud verticals ranging from healthcare to transport.

This offers opportunity for players at various levels of the value chain - but entrants need to weigh the risks carefully.

The market is suffering from "a surfeit of data centre construction with little thought to service deployment and payback," concludes the study, written by Hong Kong-based researcher Terry Graham, who spoke at a recent ACCA seminar on the topic.

A forecast published in the state media last August said investment of 270 billion yuan ($44bn) in more than 30 large-scale data centres was underway, quintupling the nation's capacity.

Liu Duo, a researcher from the China Academy of Telecommunication Research (CATR) has estimated another additional 350,000 racks built will be deployed over the period 2012-2017, doubling the number currently in use.

Liu expressed concern about the lack of a national data centre construction plan, "high electricity prices, power shortages, cost overruns, unknown demand, failure to identify real business needs and application prospects, unnecessary duplication, resource wastage, poor market regulation, and licensing uncertainty."

The report concludes that creating a viable cloud ecosystem "that can sustain these large investments in infrastructure will be an ongoing challenge, especially with the current low product maturity and market maturity for cloud services in China."

"What effect the excess capacity will have on the market when (and if) it comes online or when the data centre bubble bursts remains a topic few are willing or care to address," the study finds.

What are your experiences of the cloud business in China? Does it offer opportunity? Let us know.

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