China Data Center industry, stories from ground zero – 2nd edition

global-switch-suite

New sub class of license of Cloud service in China – AWS / Chinese Investors buying UK’s GlobalSwitch / 21Vianet

It is mentioned in the data center/IDC circles in China that AWS is issued with a Cloud service provider license. This is a new sub-class of license under the IDC license scheme of Ministry of Industry and Information Technoloy (MIIT). Previously, AWS service in China is offered through local company SINNet that fronts, sells, and supports their service.

Before this use Cloud service provider class of license, cloud service providers are made to apply for the Internet Data Center (IDC) license (given the legislation update in 2014 by MIIT to require cloud service provider to get the then only available class of license which is IDC) which comes benefits of being able to operate as a IDC, i.e. selling bandwidth. Therefore while it is harder to get for the local cloud service providders, it is legislatively impossible for foreign cloud service providers like AWS, Microsoft, Google to apply for it. The story on the ground is that this new sub class of Cloud Service Provider license under the IDC class will not be able to offer bandwidth related service, it opens the way for foreign cloud service provider to offer their cloud service directly The details of this new sub class of Cloud Service Provider is unclear yet, it is expected to be officially announced soon.

A group of Chinese investors, lead by China DailyTech (previously a subsidiary of NasDaq listed TBOW:Trunkbow International which is a mobile payment service providers catering mainly to the three main China telecommunications service providers). DailyTech but has dissolved direct subsidiary relationship and became an independent company while having two of Trunkbow founders as its chairman and senior manager. Dailytech, together with China Aeronautical (a state owned enterprise) group’s subsidary AVIC and a few investors and partners (siad to include Sha-Steel, Huawei which are unconfirmed) have joined hands to offer to Aldersgate – the parent of Globalswitch to buy over Globalswitch’s data center assets. Dailytech has three data centers in China and it is belived that China Aeronautical group has half a dozen enterprise data centers in and around China. The DailyTech-AVIC consortium has been in talk with Aldersgate for more than a year, despite the news being said in September 2016 that they are in discussion on the deal.

Warburg Pincus, a private equity fund, had through its China office entered into a joint-venture agreement with 21ViaNet (Nasdaq: VNET) to create a data center asset focused company in China, initially filled with 21Vianet’s data center assets.

I was in Beijing in early December 2016 and met a China based private equity fund, injected with funds from several China listed public companies, are looking for foreign data center assets to buy. I will try to link them up with a couple of contact I have known.

With the presence of Aliyun and ZTE in data centers overseas, this outflow of money into foreign data centers are taking firmer shape.

Reference:

  1. http://news.sina.com.cn/o/2016-11-01/doc-ifxxfysn8409947.shtml
  1. http://finance.huanqiu.com/roll/2015-12/8155561.html

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China Data Center industry, stories from ground zero – 2nd edition

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