How enterprises should use the cloud in China

China is becoming a major cloud-computing consumer, and that means foreign companies will be working with Chinese partners via the cloud. Here’s what you need to know

How enterprises should use the cloud in China

By 2020, which is not that far away, the aggregate market size of China’s cloud computing industry is expected to hit 686.6 billion yuan (about $103.6 billion), according to Forward Intelligence. China’s cloud computing industry has experienced strong growth since 2010, with a market size reaching 178.2 billion yuan in 2016, up 18.8 percent annually.

The major public cloud providers saw this coming, and most already have major points of presence in China. Moreover, China’s late-to-the-cloud upstart, Alibaba Cloud, is already getting a great deal of interest from Chinese companies looking to benefit from use of the public cloud. 

For enterprises outside China, at issue is the ease of trade with China. Although many businesses import and export to China, information sharing, legal practices, and political issues have been problematic. That’s made foreign companies wary of using cloud providers in China, even subsidiaries of American providers.

First the bad news: Foreign-invested cloud computing services operating in China need to be aware of the restrictions on data governance and other legal issues. Even if you have a local partner in China, US companies should consider the legal compliance of your cooperation agreement, including qualification compliance, data storage restrictions, and other regulatory policies. 

In other words, it’s not that easy to do business electronically with China—and the use of public clouds does not circumvent the restrictions. Using cloud computing in China is a complicated exercise, owing to the government’s security measures and active supervision of internet traffic.

Now the good news: Whether based in the US or China, cloud providers should be the ones that provide the guidance and automated systems that let you work within these restrictions. Your cloud provider becomes the primary intermediary when doing business in China, automating compliance subsystems that keep you and the companies you transact with in the cloud out of trouble. Yes, that means you should use the same cloud provider as your partners.

There is a lot of profit to be gained by US-based companies in trade with China.  Although difficult and costly regulations kep manhy foreign companies out of China in the past, the common use of public cloud providers could make electronic integration of partner systems both easier and compliant with both Chinese and US laws. For the all-mighty dollar, we welcome China to the cloud.