China's cloud computing industry is still gradually developing, which implies infinite opportunities. When it comes to SaaS, the potential is even larger. This article is an overview of the country's cloud computing industry featuring the key players in the market, including Kingdee, Kingsoft, Youzan and Weimob.
Server device
In China, public cloud services have been increasingly popular, along with a number of existing customers showing desires to extend and customize the providers' offerings at their own expense. The country's cloud service value chain possesses enormous investment value at different levels. One reason is that the high cost of data migration generates solid user stickiness; the other reason is the relative independence of the sector from macroeconomic fluctuations. As projected by IDC, the cloud computing penetration among enterprises will increase to 15.8% by 2024 in China. By then, the market size will reach CNY 563.3 billion.
Currently, China's cloud market is at an early stage of development, with a lower market penetration rate compared with that in the United States. As per R&D World, China's spending on research and development (R&D) is expected to top with USD 621.5 billion in 2021, denoting a 25.5% share of the global R&D spending that year. In contrast, China's spending on cloud computing services only accounts for 6.2% of the global figure. It points to the fact that there is a great potential for the cloud computing market within China along with the continuing technological development.
11 out of the 20 most prominent tech companies in the US have been intensively engaged in the software-as-a-service (SaaS) business, which accounts for 40% of the value of those 20 companies. On the contrary, only 6 out of the 20 major tech players in China have SaaS business, occupying slightly 3% of the total value of those 20 largest Chinese techs. The industry's key players in China are the local SaaS providers such as Kingdee and foreign players that charge exorbitant prices in exchange for customized services.
Considering China's strict regulation on foreign companies, especially in various technology-related fields, the local companies are more likely to get the upper hand in the competition.
Kingsoft Cloud Holdings (KC:NASDAQ)
Kingsoft Cloud is the largest independent cloud service provider in China. Unlike many others in the space who tend to be narrowly segmented, it has extended from its original infrastructure-as-a-service (IaaS) model to platform-as-a-service (PaaS) to SaaS, forming a complete closed-loop that covers the entire cloud computing market to achieve cross-functional expansion as the scale grows. Kingsoft Cloud has built a comprehensive cloud platform consisting of extensive Cloud infrastructure, diverse products and industry-specific solutions across public cloud, enterprise cloud and AIoT cloud services. Powered by Kingsoft Group's enterprise service capabilities, Kingsoft Cloud is widely trusted in China and has inherited a huge customer base.
In the midst of fierce competition in the cloud service market, Kingsoft Cloud raised a total of USD 720 million in six rounds of funding in 2017-2018 and went public in May 2020. With sufficient cash reserves and the support from consumer electronics giant Xiaomi, Kingsoft has been able to survive and thrive. Its customer are, however, so concentrated now that the three largest of them account for 53% of its revenue.
Kingsoft Cloud's focused approach has made it a prime force in a few cloud industry subfields, such as games, video streaming, live streaming and finance. It is now expected to further boost its presence in various new verticals, where the main potential of the cloud market is mainly distributed. For example, Kingsoft Cloud recently shifted to the financial and government fields, enabling it to open up new business fulcrums beyond the public cloud business. In 2019, Kingsoft Cloud entered the field of Artificial Intelligence of Things (AIoT), which happens to be one of the key investment areas in China's 'new infrastructure' course.
Server device
In China, public cloud services have been increasingly popular, along with a number of existing customers showing desires to extend and customize the providers' offerings at their own expense. The country's cloud service value chain possesses enormous investment value at different levels. One reason is that the high cost of data migration generates solid user stickiness; the other reason is the relative independence of the sector from macroeconomic fluctuations. As projected by IDC, the cloud computing penetration among enterprises will increase to 15.8% by 2024 in China. By then, the market size will reach CNY 563.3 billion.
Currently, China's cloud market is at an early stage of development, with a lower market penetration rate compared with that in the United States. As per R&D World, China's spending on research and development (R&D) is expected to top with USD 621.5 billion in 2021, denoting a 25.5% share of the global R&D spending that year. In contrast, China's spending on cloud computing services only accounts for 6.2% of the global figure. It points to the fact that there is a great potential for the cloud computing market within China along with the continuing technological development.
11 out of the 20 most prominent tech companies in the US have been intensively engaged in the software-as-a-service (SaaS) business, which accounts for 40% of the value of those 20 companies. On the contrary, only 6 out of the 20 major tech players in China have SaaS business, occupying slightly 3% of the total value of those 20 largest Chinese techs. The industry's key players in China are the local SaaS providers such as Kingdee and foreign players that charge exorbitant prices in exchange for customized services.
Considering China's strict regulation on foreign companies, especially in various technology-related fields, the local companies are more likely to get the upper hand in the competition.
Kingsoft Cloud Holdings (KC:NASDAQ)
Kingsoft Cloud is the largest independent cloud service provider in China. Unlike many others in the space who tend to be narrowly segmented, it has extended from its original infrastructure-as-a-service (IaaS) model to platform-as-a-service (PaaS) to SaaS, forming a complete closed-loop that covers the entire cloud computing market to achieve cross-functional expansion as the scale grows. Kingsoft Cloud has built a comprehensive cloud platform consisting of extensive Cloud infrastructure, diverse products and industry-specific solutions across public cloud, enterprise cloud and AIoT cloud services. Powered by Kingsoft Group's enterprise service capabilities, Kingsoft Cloud is widely trusted in China and has inherited a huge customer base.
In the midst of fierce competition in the cloud service market, Kingsoft Cloud raised a total of USD 720 million in six rounds of funding in 2017-2018 and went public in May 2020. With sufficient cash reserves and the support from consumer electronics giant Xiaomi, Kingsoft has been able to survive and thrive. Its customer are, however, so concentrated now that the three largest of them account for 53% of its revenue.
Kingsoft Cloud's focused approach has made it a prime force in a few cloud industry subfields, such as games, video streaming, live streaming and finance. It is now expected to further boost its presence in various new verticals, where the main potential of the cloud market is mainly distributed. For example, Kingsoft Cloud recently shifted to the financial and government fields, enabling it to open up new business fulcrums beyond the public cloud business. In 2019, Kingsoft Cloud entered the field of Artificial Intelligence of Things (AIoT), which happens to be one of the key investment areas in China's 'new infrastructure' course.