Alibaba Cloud’s Foray Into Southeast Asia Might Be a Stroke of Genius

As custom has it, when going global most companies set their eyes on the west. New York and London are awash with international headquarters cut from every cloth, but the paradigm seems to be shifting, at least for Chinese companies. Alibaba’s cloud computing arm for one has skipped over the western financial hubs and set up an international headquarters in Singapore, a mere five-hour flight away from its home base in Hangzhou. With the trade war raging on and the Chinese tech ecosystem reaching maturity, the journey to the west that every half-successful local CEO saw as a prerequisite for global success now feels redundant. China’s tech giants are becoming more aware of where they are welcome, where their expertise and know-how are needed and, most importantly, which markets they understand better. 

Derek Wang, general manager of Alibaba Cloud’s Singaporean headquarters is an amiable tech executive with a PhD in Computer Science and experience working for Oracle before joining Alibaba in 2014. Dr. Wang has been running Alibaba Cloud’s international operations since February 2019 and beams with confidence when asked about the internationalization strategy chosen by the company.

We are in Asia, for Asia. We see the convergence of youth and internet penetration across Southeast Asia and how it mirrors China’s own digital transformation journey. With our role in supporting China’s digitization push, we believe there is huge potential for us to share our experience and expertise as the data intelligence backbone of Alibaba Group, from retail to logistics, payments to entertainment and hospitality,” underscores Dr. Wang levelheadedly. 

Alibaba Cloud has been proactively gaining ground in Southeast Asia since its triumphant foray into the region in 2015. It is now the number one provider of cloud computing services in this part of the world, ahead of global leaders like Amazon Web Services (AWS) and Microsoft Azure. Part of Alibaba’s strategy was giving the countries what other providers did not – localization.

Southeast Asia is a very diverse region, and we believe localization is key,” says Dr. Wang. “That is why we set up our first Singapore local data center back in 2015. We are also the first global cloud provider with local data centers in Indonesia and Malaysia, and have the largest infrastructure footprint in Asia Pacific with more than 15 data centers in the APAC region.

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However, while the region might be relatively similar to China culturally (compared to the west) and economically, there is still a great deal of learning and adaptation Chinese companies have to do to nimbly navigate the local environment.

Each Southeast Asian nation is at a different stage of their digital transformation journey, and with different priorities and market conditions,” notes Dr. Wang. “The challenge is to familiarize our business and identify the right solutions, which is why we pursue close working partnerships not just with the authorities and businesses, but with educational institutions as well. For example, in Singapore we are working closely with the national universities from cutting edge AI research to undergrad and post-graduate training.

Alibaba’s data intelligence backbone has so far established a close relationship with the Nanyang Technological University (NTU), one of Singapore’s top schools, through The Alibaba-NTU Singapore Joint Research Institute, the company’s first joint research center outside of China.

The cloud computing powerhouse has also birthed the Innovation Incubator Programme in partnership with the National University of Singapore (NUS) and a series of cloud and technology courses with the Singapore Management University (SMU). On top of that, the company has already held two summits in the city state, the Alibaba Cloud Summit, in August 2018 and 2019. 

Alibaba Cloud’s promotional video describing the Lazada case (Source: Alibaba Cloud)

Housed in the cylindrical AXA Tower in downtown Singapore, Alibaba Cloud does not need to go far to find clients and partners. Lodged in the same building is the recent addition to the Alibaba family, the Southeast Asian e-commerce champion Lazada. The cloud computing gurus from several floors above are responsible for giving Lazada a noticeable technological facelift, providing it with the bandwidth and elasticity to support the massive annual 11.11 shopping festival and for offering Anti-DDoS solutions to fend off malicious traffic, and DDoS attacks launched against Lazada. The Chinese cloud computing wizard also laded a hand to Lazada in developing live streaming tools on their platform.

A couple of hours away from the glitzy Singaporean skyline, in the bustle of Indonesia’s capital, Jakarta, Tokopedia, the local unicorn e-commerce marketplace, also relies on Alibaba Cloud to support its cloud-native architecture. Alibaba’s business with the company spans various areas including IaaS, Big Data, AI, and Security. Additionally, the cloud company collaborates with regional governments on gargantuan smart city projects, including the one in Kuala Lumpur, and improving tourist infrastructure and even postal services. 

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Although Alibaba might have been late to the global cloud computing table, it has definitely come right on time in APAC. While global leaders like AWS and Azure treat it just as any other region, the Chinese giant has showcased a more personal approach that has sat well with the local businesses and governments alike. Securing dominance in one of the world’s fastest growing regions away from the hubbub of the trade war with the US, while avoiding the target markets of bigger competitors might not be a bad idea after all.