China Private Cloud Market 2021: Size Forecast, Brand Competition, and Market Share Analysis

Active demand from end‑users is helping the private cloud market enter a period of rapid growth. Industries such as finance, government, and healthcare have very large IT budgets and extremely strict requirements for data privacy and stability. As a result, these sectors still primarily adopt private cloud deployments and are gradually transitioning toward hybrid cloud. Thanks to the strong development of industry clouds such as government cloud and financial cloud, the private cloud market has grown significantly in recent years.

According to data from the China Academy of Information and Communications Technology (CAICT), China’s private cloud market reached RMB 42.68 billion in 2017, up 23.8% from 2016. The market is expected to continue steady growth from 2018 through 2021 as security, reliability, and maturity improve.

(Reference: “2018 China Private Cloud Industry Analysis Report – In‑Depth Market Research and Development Outlook” by GuanYan Tianxia.)

Chart: China Private Cloud Market Size and Growth Forecast
Data source: Compiled by GuanYan Tianxia.

The private cloud market has many participating vendors, and competition is becoming increasingly diversified. From the perspective of vendor types, public cloud providers, traditional IT vendors, telecom operators, systems integrators, and open‑source startups are all active in the private cloud space. Vendors such as Huawei, H3C, China Telecom, Inspur, and VMware each have distinctive strengths and are currently among the market leaders.

Chart: 2016–2017 Private Cloud Market Brand Competitiveness Analysis
Data source: Compiled by GuanYan Tianxia.

1. Government Cloud: Strong Policy Support and Accelerated Vendor Deployment

Government cloud has become an important part of China’s cloud computing market and one of the main destinations for IT investment in the public sector. China’s government cloud market began with city‑level pilots in 2010 and experienced an initial boom in 2014. In recent years it has grown rapidly.

In 2016, government spending on government‑cloud infrastructure reached RMB 7.39 billion, accounting for 20.7% of China’s overall cloud infrastructure market and 9.8% of total IT investment in the government sector that year.

In 2017, the growth of the government cloud market accelerated markedly, with a significant increase in scale. What was once a “niche” segment has become a key part of the cloud computing market. The main reasons are: (1) national policies have strongly supported government‑cloud construction, and (2) major IT vendors and internet companies have all been actively promoting their government‑cloud solutions.

Chart: China Government Cloud Market Size and Growth Forecast
Data source: Compiled by GuanYan Tianxia.

Government‑cloud platforms are primarily built and operated using a service‑purchasing model, while “government industry clouds” are mostly built in‑house by departments themselves. Based on investment主体 and construction objectives, government cloud can be divided into government‑cloud platforms and government‑industry clouds:

(1) Under policies that encourage purchasing public services, the “government‑buys‑services” model has become the mainstream approach for building and operating government‑cloud platforms since 2016. The government‑cloud platform market is now in its “second half”, and most construction is expected to be completed within the next one to two years.

(2) For government‑industry clouds, because many departments already have a strong IT foundation and handle highly sensitive workloads, they tend to favor self‑built models. Internal technical teams handle the operations and maintenance of these clouds. Over the next 3–5 years, government‑industry clouds are expected to become a major growth driver of the government‑cloud market.

Competition and cooperation among domestic vendors are together forming the government‑cloud ecosystem. Due to the sensitivity of government workloads, domestic vendors dominate this market. Current players include: large IT companies such as Huawei, H3C, Inspur, Sugon, FiberHome, and ZTE; telecom operators such as China Telecom, China Unicom, and China Mobile; internet companies such as Alibaba, Tencent, and Kingsoft; and systems integrators such as Taiji, Digital China, Chinasoft, and Donghua Software. Each group has its own strengths, and their competitive and cooperative relationships collectively shape today’s market structure.

Chart: 2017 China Government Cloud Market Vendor Assessment
Data source: Compiled by GuanYan Tianxia.

2. Financial Cloud: Legacy IT Bottlenecks Drive the Need for Real Cloud‑Native Transformation

The financial sector is one of the industries most eager to adopt cloud computing. In terms of user numbers, financial services currently have among the highest counts of industry‑cloud use cases. As more financial institutions turn to the cloud to support applications and handle highly concurrent workloads, cloud computing is rapidly integrating with finance and transforming the industry.

Banks, funds, insurers, and securities firms are all moving into cloud computing, kicking off a new wave of innovation in financial information and data management, and providing cloud vendors with a broad development space. According to CCID Consulting’s “2016–2017 China Financial Cloud Market Status and Development Trends” report, China’s financial cloud market reached RMB 4.34 billion in 2016. It was expected to reach RMB 6.30 billion in 2017, a year‑on‑year increase of 45.2%.

For security and reliability reasons, traditional banks and securities firms tend to favor private or hybrid financial‑cloud deployments, while many emerging fintech companies prefer public cloud, working with third‑party providers to scale quickly and launch services faster. Different financial institutions choose to either build their own infrastructure or co‑build with financial‑cloud vendors depending on their specific circumstances.

Chart: China Financial Cloud Market Size and Growth
Data source: Compiled by GuanYan Tianxia.

The financial‑cloud market is still in its early development stage, and vendor market shares are relatively fragmented. CCID evaluated leading vendors in financial‑cloud IaaS and PaaS markets across two dimensions: development capability and market capability. In financial‑cloud IaaS, Huawei and Yunhong (Yunhong Tech) are identified as leaders. In financial‑cloud PaaS, Red Hat, Pivotal, and BoCloud are leading vendors.

Internet companies are also bringing cloud technology into finance. For example, Alibaba Cloud has long provided IaaS services to Ant Financial and has deep roots in financial workloads. QingCloud, which focuses on financial private cloud and has strong security advantages, has won major customers such as China Merchants Bank and Taikang Life.

Chart: 2016 China Financial Cloud IaaS Market Brand Share
Chart: 2016 China Financial Cloud PaaS Market Brand Share
Data source: Compiled by GuanYan Tianxia.

3. Healthcare Cloud: Rising Acceptance of Cloud, Market on the Verge of Rapid Growth

The “Internet+” initiative is pushing healthcare data centers toward virtualization and cloud computing. The construction of digital hospitals demands higher levels of resource sharing and system integration inside and outside the hospital. Under the influence of “Internet+”, the healthcare sector at all levels needs more highly integrated solutions.

66.3% of hospital CIOs say that “Internet+” will accelerate the transition of existing data centers toward virtualization and cloud computing.

Investment in healthcare cloud is growing rapidly, and the market is about to enter a phase of fast expansion. Healthcare cloud represents a new model of hospital IT services. The initial market‑education phase has been completed; the market is now moving into a rapid‑development stage. Research from the Mobile Informatization Research Center shows that 21.7% of Tier‑2 and above hospitals have already deployed cloud computing solutions, 5.3% are currently deploying, 8.6% are evaluating, 23.4% plan to deploy in the next 1–2 years, and 41% have no current plans.

China’s healthcare cloud market was RMB 2.67 billion in 2015 and was expected to exceed RMB 5 billion by 2017.

Charts 61 & 62
Chart: 2014–2017 China Healthcare Cloud Market Size and Growth
Chart: Cloud Deployment Status in Tier‑2 and Above Hospitals
Data source: Compiled by GuanYan Tianxia.

Partnering with industry system integrators is the main strategy for vendors entering the healthcare‑cloud market. Integrating with hospitals’ core systems is the most critical and challenging part of the healthcare cloud value chain. Both internet companies and traditional IT vendors view collaboration with healthcare system integrators as the primary entry point, using these partnerships to penetrate the underlying hospital systems.

In the end, competition in the healthcare‑cloud market will largely become a contest of strength and resources among these partners.

Chart: Alliances Between Cloud Providers and Healthcare System Integrators
Chart: Selected Vendors in the Healthcare Cloud Space
Data source for all charts: Compiled by GuanYan Tianxia (please cite “TC” when re‑publishing).