China’s Cloud Services Spending Hits $7.3 Billion in Q1 2022

A Wednesday report released by Canalys showed that cloud infrastructure services expenditures in the Mainland of China grew 21% year on year to reach $7.3 billion in Q1 2022, or about 13% of global cloud infrastructure spending.

Since March 2022, a resurgence of COVID-19 has hampered the delivery of both new and ongoing projects resulting in a dampening of overall revenue in the Chinese cloud infrastructure services market. But with the accelerated deployment of China’s New Infrastructure plan and the increasingly urgent need for the digital transformation of enterprises, cloud service providers are capturing new opportunities for their infrastructure services.

Overall, the market leaders in China remain unchanged in Q1 2022 with the top four cloud service vendors still including the cloud divisions of Alibaba, Huawei, Tencent, and Baidu AI Cloud. The top four providers have benefited from the expansion of cloud use and currently account for 79% of the sector’s total expenditure in China, an increase of 19% year on year.

Alibaba Cloud continues to lead the cloud infrastructure services market as it accounted for 36.7% of total spending in Q1, an increase of 12% year on year. Its overseas expansion is proceeding as planned, the company says, having announced the official opening of its data center in South Korea on March 30.

Huawei Cloud was the second-largest cloud service provider in Q1, growing 11% to capture an 18.0% market share. The company has managed to strike cooperation agreements with more than 100 enterprises through its ecological integration with Huawei’s terminal business (PCs, smartphones and IoT) since it launched its “cloud-to-cloud collaboration” strategy last year.

Tencent Cloud, the third-largest provider, accounted for 15.7% of the market. The company’s revenue fell slightly this quarter compared with the previous quarter, mainly due to its internal business restructuring and changes to its growth strategy. The year 2022 saw a gradual shift in Tencent Cloud’s strategic focus toward profitable growth rather than business volume growth.

The fourth provider, Baidu AI Cloud, accounted for 8.4% of the market and grew by 43%. According to Baidu‘s Q1 financial report the revenue of the AI Cloud division reached 3.9 billion yuan ($583 million), up 45% year-on-year.

SEE ALSO: Alibaba Cloud’s JV Opens Two Data Centers in Saudi Arabia

With the advantages of combining cloud services with AI technology, alongside continued substantial investment in its businesses, Baidu AI Cloud maintained high growth this quarter. The division ranks top three in the market of financial cloud solutions, and is constantly improving. At present, it has served nearly 500 customers in the financial industry, covering marketing, risk control, operation and other core financial scenes. In addition to revenue from the financial sector, Baidu AI Cloud is increasing its adoption rate in manufacturing, water supply and energy through its Kaiwu Industrial Internet Platform.