Alibaba Tops China's Cloud Market List; Scores Brownie Points With Overseas Expansion

Cloud infrastructure services spend in mainland China grew 11% year on year in Q2 2022, reaching $7.3 billion and accounting for 12% of overall global cloud spend, Canalys reports. 

Contrastingly China's market growth slowed significantly, falling below 20% for the first time versus the high growth momentum of 33% seen in the global cloud services market thanks to China's COVID-19 resurgence.

Canalys forecasts the Chinese cloud market will regain momentum in the year's second half as business activities prop up in first-tier cities in June. 

Also Read: JD Tops 500 Private Chinese Enterprises List, Surpasses Alibaba

"China's cloud services have entered a new era where cloud vendors are no longer focused on just revenue scale and business growth, but more on high-margin, standardized products," analyst Yi Zhang said.

Alibaba Group Holding Limited BABA Cloud, Huawei Technologies Co, Ltd Cloud, Tencent Holding Ltd TCEHY Cloud, and Baidu, Inc BIDU AI Cloud maintained their positions as market leaders in the Chinese cloud market. 

The top four providers accounted for 79% of total expenditure in China, despite a fall in their growth rates versus the past quarters. 

Alibaba Cloud remains the market leader in China's cloud services market. It grew 10% to account for 34% in Q2. I

Its market share saw a significant decline of around 2% against the previous quarter due to challenges in customer acquisition in the government sector.

Alibaba Cloud continued to do well with its overseas expansion plans this quarter, launching four data centers in three countries, namely Germany, Thailand, and Saudi Arabia.

Huawei Cloud accounted for 19% of the market after growing 11% annually and was the second-largest cloud service provider in Q2. 

Tencent Cloud accounted for 17% of the Chinese cloud market in Q2. 

Baidu AI Cloud was fourth, taking 9% of the market and growing by 25% year on year.

Earlier Alibaba CEO Daniel Zhang said the cloud computing business realized full profitability for the first time in the last financial year with over 4 million paying customers.

"For the cloud, we expect BABA to be well positioned to capture the market opportunities in the next few years," Jefferies said.

Price Action: BABA shares traded higher by 2.56% at $91.81 on the last check Friday.

Photo by Fooksou Lamimo via Wikimedia Commons