China govt deals boost Alibaba’s cloud dreams

Shanghai/Beijing, June 19: E-commerce giant Alibaba Group is an underdog in the global cloud computing industry, but it has one thing going for it: It's Chinese.

Alibaba this week scored a minor deal with China's northeastern port city of Dalian to build a cloud computing centre and provide online government services such as bill payment.

The pact is a small part of a growing portfolio of similar cloud services tie-ups between Alibaba and government bodies around China and comes against a backdrop of Beijing's deepening paranoia about foreign technology.

The domestic alliances will help Alibaba's cloud unit Aliyun, literally "Ali Cloud", build scale and gain experiencebeforeanyglobal campaign to challenge market leaders Amazon.com, Microsoft and Google.

"Basically, they are following the political trends and they're grabbing the business opportunities that result," said James McGregor, chairman for Greater China at US communications

Domestic alliances will help Alibaba's cloud unit build scale before any campaign to challenge market leaders

technology food chain, and so there are huge opportunities." The sector has boomed as it has become cheaper for companies to store data on remote servers, or in the cloud,ratherthanmaintaining servers in-house. Global cloud information technology(IT)infrastructurespending is expected to grow 21% to $32 billion in 2015 from a year earlier, according to US market researcher IDC, and rise to $52 billion by 2019.

For the time being, Aliyunissmall.Itaccounted for just 1% of Alibaba's overall revenue for the year ended March 31. But it says in China it has the biggest market share in cloud computing.