How foreign businesses should engage cloud computing in China

Research into and use of cloud computing is taking off around the world and China is no exception. However, China’s cloud environment has strict regulations that makes operating there a unique experience. Understanding this new and evolving landscape is extremely important and with companies currently moving their business to the cloud there has never been a better time. In this article, Raquel de Oliveira Barra, head of marketing at Freudenberg IT Asia (FIT), explains why China’s local information technology (IT) infrastructure is so unique and outlines the benefits from upgrading a legacy computer system in order to join the world of cloud computing.

There is a consensus in most business environments about the advantages of moving certain business operations partially or even entirely into the cloud. It is the ‘how to get there’ that keeps most chief information officers (CIOs) awake at night. Despite joining this trend relatively late, China has quickly caught up. The technology and services available for cloud environments in China are state of the art and the possibilities are endless. Not only is cloud computing more in demand than ever before, but China also leads in the number of international providers seeking to grab a piece of the domestic market.

China is unique when it comes to cloud computing and perhaps one thing that distinguishes this market more from others, is their strict IT regulations. Foreign companies in China are only allowed to own and operate data centres for private use. They are not permitted to commercialise their internet data centres to third parties. Even the world’s largest cloud providers such as Amazon AWS and Microsoft Azure, need to work with a local partner to provide their services in China. Foreign companies not only are unable to directly apply for an internet data centre (IDC) licence, but face partnership business structure limitations as well, since foreign shares in a corporation cannot exceed 49 per cent. Commenting on the issue, Xu Jiadong, manager of networking services at Freudenberg IT Asia said,

It is a complex problem, with much more to it than what most companies and users are aware of. For example, imagine a company that has its entire cloud system already set up in the United States and Europe with Amazon’s AWS. This company now decides to come to China and set up a cloud environment there as well. They will need to choose their local provider very carefully to avoid interface incompatibilities. The problem would be even more complex if the company uses native cloud applications. Cloud providers all over the world are getting increasingly protective of their systems, interfaces and applications in order to avoid competition and prevent clients from switching to other providers. Therefore, we can expect this issue to get increasingly complex.

It is not only international companies who face problems when trying to move their businesses to the cloud. Local Chinese companies also face particular challenges, especially those who still run on legacy systems. This has become a chronic issue in China with Reto Bless, regional chief executive officer of Freudenberg IT Asia noting that,

Observations over many years show that, in China, companies tend not to prioritise keeping their IT systems up to date. It is very common to see companies who ran an IT implementation once in the past, and simply kept using that system for as long as it worked, without paying any attention to updates and new launches. On top of that, in many cases, local Chinese companies have infrastructure deficiencies. We often see cases companies invest heavily in state-of-the-art equipment, with the best servers and lots of bandwidth in order to set up a private cloud. Only after the company starts using it do they realise that the performance they are experiencing is not as expected because they overlooked that the infrastructure, such as wall cabling, was obsolete and could not support this technology.

How can companies who want to move their business to the cloud overcome these difficulties? It is not too difficult Mr Xu explains, “Not all are challenges for those who suit the cloud. With preparation and the right information, companies can successfully transition into the world of the cloud.” The first step a company should take is to organise its internal data before jumping into the cloud. The cloud’s design should revolve around what the organisation’s data needs are and not the other way around. Once this is clear, the company can decide on the level of safety their data requires and which cloud environment best suits its needs. This could either be the private cloud, the public cloud or a hybrid solution. The next step is to choose a cloud provider. It is essential to take into account interface compatibility or the specific regulations of each industry. After that, companies should make sure that their infrastructure is ready to support the chosen solution. Each case is unique but following these steps will help ensure that a company follows best practices and can transition into the cloud in China successfully.

Raquel de Oliveira Barra is the head of marketing at Freudenberg IT Asia (FIT), the Freudenberg Group’s global IT solutions provider. FIT has been a specialist in the needs of small and medium-sized enterprises for over 20 years. Its portfolio covers all facets of the IT Industrial solutions landscape, from managed services through industrial processes to system integration. FIT Asia operates some of the safest Tier IV data centres in the world and brings companies peace of mind, so they can focus on their business without worrying about IT complexity.