Canalys: China's mainland cloud service spending reached USD 9.4 billion in Q2, with a year-on-year growth of 8%

According to Zhitong Finance APP, Canalys stated in a report that in the second quarter of 2024, China's mainland spending on cloud infrastructure services reached $9.4 billion, an 8% year-on-year increase. Alibaba Cloud, Huawei Cloud, and Tencent Cloud continue to dominate the market, collectively holding a 71% market share. Cloud service customers, especially those focusing on digitalization, have increased their spending due to the promotion of AI. Leading cloud providers are currently focusing on deep integration of AI with cloud computing to explore new growth opportunities. The impact of AI on cloud consumption is becoming increasingly significant, gradually becoming a key driver for business expansion. The customer base of AI platforms provided by top cloud providers is expanding continuously, and is expected to continue driving the growth of cloud consumption in the second half of 2024.

To maintain a competitive advantage in the field of AI innovation, top cloud providers in China are increasing their investments in AI. They are continuously upgrading AI large models and developing customized solutions for specific industries. For example, Huawei Cloud has successfully applied its PanGu large model to 30 industries and 400 business scenarios, while Baidu Intelligent Cloud has launched 20 new AI applications. With the expansion of their customer base, these AI-related investments are gradually yielding returns, while also intensifying competition. In addition to integrating AI technology, cloud providers are also collaborating with third-party AI model developers to expand the AI ecosystem. For instance, in July 2024, Alibaba Cloud announced a collaboration with Moon's Dark Side to help enhance Kimi's intelligent assistant's reading and reasoning capabilities.

Canalys analyst Zhang Yi stated, "After a period of intense competition, top cloud providers have realized that simply lowering prices cannot sustainably drive customer spending growth, and they need to enhance the competitiveness of their services. They are now shifting their focus to innovation and collaboration within partner ecosystems as a differentiation strategy aimed at attracting and retaining customers. Cloud providers are actively collaborating with channel partners to develop customized AI solutions for specific industry needs. In the second quarter of 2024, revenue generated through channel partners accounted for 26% of China's total cloud computing revenue, and this proportion is expected to further increase. Collaborating with professional partners helps cloud providers enhance the value of their AI large models and address customer concerns about the complexity of AI deployment."

Alibaba Cloud maintains a leading position in the mainland China market, holding a 36% market share. Its overall growth is mainly driven by the public cloud business, which achieved double-digit growth in the second quarter of 2024. The success of AI products has also made a significant contribution to Alibaba Cloud's growth recovery, with the number of paying users reaching a historical high, achieving a quarterly growth rate of 200%, while revenue continues to grow at a three-digit rate. This momentum has prompted Alibaba Cloud to further increase its investment in AI. In July 2024, Alibaba Cloud launched the AI assistant "Xiao Ying," providing a knowledge base and decision support, enabling automatic learning and execution of tasks.

Huawei Cloud solidified its position as the second largest cloud provider, with a market share of 19%, maintaining a steady growth of 13%. Huawei Cloud is steadily advancing in the field of AI. In June 2024, Huawei Cloud launched the latest version of its AI large model, PanGu 5.0, offering various parameter configurations to meet diverse training needs of customers. In terms of channel partner ecosystem, Huawei Cloud announced a partnership capability program in collaboration with TCL, Ernst & Young, and SoftBank, to enhance partners' capabilities in product and scenario technologies. Currently, about 4,500 partners have joined the program and developed over 500 solutions in cooperation with Huawei Cloud.

Tencent Cloud ranks third with a market share of 16%. In June 2024, Tencent Cloud announced to provide 1 billion Tokens of Hunyuan large model for free to newly migrated enterprise users to attract more customers. Tencent Cloud also launched multiple versions of the Hunyuan large model including Pro, Standard, and Lite, along with free exclusive migration tools and services to meet diverse user needs. At the Tencent Global Digital Ecosystem Conference in September 2024, the company announced a 150% increase in the number of partners with annual revenue exceeding 1 million RMB (approximately $142,000). Recognizing the importance of partner service capabilities in enhancing channel ecosystem, Tencent Cloud introduced a new partner program in September 2024 to develop channel partners with product sales and service experience, while also piloting an MSP service provider certification system