Aliyun, the cloud computing unit of Chinese e-commerce giant Alibaba, is taking another major step toward international expansion with the opening of a data center in Singapore. Aliyun received a $1 billion investment earmarked for global expansion from its parent company last month.
The Singapore data center is the third one launched outside of mainland China by Aliyun (the other two are in Hong Kong and Santa Clara, California) and will serve as its international headquarters once it opens in September. The company now has seven data centers in total. Aliyun, which currently claims 1.8 million customers, also plans to target the Middle East, Japan, and Europe.
Cloud computing is a promising segment for Alibaba as it seeks to diversify beyond its core e-commerce business. In its second-quarter earnings report last week, Alibaba reported its slowest quarterly revenue growth in three years, but said it was “beginning to see the positive impact of years of investment” in Aliyun’s technology, as its quarterly revenue from cloud-computing and Internet infrastructure jumped 106 percent year-over-year to $78 million.
Aliyun has to shoulder the burden, however, of being a relatively late entrant to the cloud computing business and faces competition from established players like Amazon Web Services, Microsoft Cloud, and Google Cloud. To differentiate, Aliyun has focused on serving Chinese companies who need servers in other countries, as well as emerging markets with growth potential.
For example, the IT market in Singapore, Indonesia, Malaysia, and Thailand is expected to reach $52 billion this year, with annual growth of six percent, according to Gartner research.
In the Middle East and North Africa (MENA), Gartner expects the public cloud services market to grow 17.1 percent this year to $851 million, up from $727 million last year. Aliyun has already signed a joint venture agreement with Dubai-based holding company Meraas to serve companies and government agencies in MENA, where it also plans to build a data center.