Alibaba Cloud swiftly ventures overseas

Author | Liu Baodan

Editor | Huang Yu

The wave of enterprises going overseas, combined with the global boom of AI large models, has brought new opportunities for cloud vendors to expand internationally. Against this backdrop, Alibaba Cloud has begun to accelerate its efforts to capture the global market.

On December 11, at the international market development communication conference, Yuan Qian, President of Alibaba Cloud Intelligence International, revealed that in the next three years, Alibaba Cloud will invest in building new data centers in five countries worldwide, located in South Korea, Malaysia, the Philippines, Thailand, and Mexico. While Alibaba Cloud continues to strengthen its presence in Asia, it is entering the Mexican market for the first time.

Alibaba Cloud's new round of overseas expansion will focus on AI infrastructure, which also means that, after 10 years of going overseas, Alibaba Cloud is entering the deep waters of the cloud computing service market.

In 2008, to address the insufficient computing power of Taobao, Alibaba independently developed the large-scale distributed computing operating system "Feitian" and established Alibaba Cloud the following year. In 2014, as internet companies expanded their businesses globally, the demand for internet infrastructure, including cloud computing, emerged, leading Alibaba Cloud to go international.

Alibaba Cloud's first stop in its overseas development was Hong Kong, followed by the establishment of data centers and availability zones in various locations across Asia, Europe, and North America. Currently, Alibaba Cloud operates 85 availability zones in 28 regions worldwide, covering mainland China, Hong Kong, Southeast Asia, Japan and South Korea, the Middle East, and Europe and the United States.

In 2017, Alibaba Cloud launched a strategic partnership with the Olympic Committee, subsequently participating in the Winter Olympics, Asian Games, and this year's Paris Olympics. The Olympics also reflect Alibaba Cloud's rapid development. According to Yuan Qian, Alibaba Cloud has experienced rapid growth in international markets, with its market size increasing more than 20 times over the past five years.

After years of deepening its overseas market, Alibaba Cloud has welcomed the AI era. In September last year, Eddie Wu was appointed CEO of Alibaba Group, and he clearly proposed a strategic focus on "user-first, AI-driven." Currently, Alibaba Cloud has laid out a complete AI ecosystem, including the Tongyi large model, based on cloud computing.

As of the quarter ending September 30, 2024, Alibaba Cloud achieved revenue of 29.61 billion yuan, a year-on-year increase of 7%, with AI-related product revenue achieving triple-digit year-on-year growth for five consecutive quarters.

Under the tone of "All in AI," Alibaba Cloud has also refocused on the driving points of its international business.

On one hand, Alibaba Cloud aims to serve enterprises going overseas well. Song Yingqiao, Vice President of Alibaba Cloud Intelligence International, believes that from 2022 to now, with the improvement of Chinese technology, Chinese manufacturing, and the emphasis on Chinese brands, various industries have begun comprehensive overseas expansion, entering an era of great navigation for Chinese enterprises.

The overseas expansion models of Chinese enterprises include direct replication, layout through the industrial chain, localized marketing, and localized operations. They generally face challenges in global management, localized operations, global ecology, and supply chains. Song Yingqiao stated, "In the face of such challenges, the key that Chinese enterprises must grasp is digitalization."

In addition to a digital foundation, AI is also playing an increasingly important role. In addition to cloud computing services, Alibaba Cloud also provides advanced AI technologies and products overseas, such as the launch of the Bai Lian platform in Singapore this year Song Yingqiao believes that AI can empower enterprises in three aspects: efficiency improvement, intelligence, and brand digitization. "Many traditional mechanisms of goods and people can be reconstructed through AI, allowing brands and goods to connect, which was not achievable without AI."

On the other hand, the demand for local enterprises to move to the cloud has significantly increased. According to Yuan Qian's observations, in Asia, many countries that previously seemed underdeveloped or developing have shown a noticeable growth in the demand for digital transformation. "Previously, we served mainly leading enterprises and large groups, but now many local financial and retail companies are also considering efficiency and effectiveness in the context of the larger economic cycle, and they need to consider the degree of digitization."

In her view, investing in Mexico is a long-term strategy of 5 to 10 years, with a positive outlook on the Latin American market, which not only has a large number of Chinese companies going overseas but also has an increasing local demand for digitization. The other four data centers are in Asia, representing additional investment. "Whether in the internet, digital transformation, or the overall development of AI, Asia is the most active market."

"The first decade has passed, and we have built the most basic platform capabilities. In the next decade, especially in the AI era, we need to seize opportunities with better computing power, products, and AI capabilities," Yuan Qian stated.

Alibaba Cloud's advantage lies in its strong local compliance; for example, the company was the first to obtain the highest local compliance certification in Saudi Arabia. Currently, Alibaba Cloud has over 130 qualifications and certifications, making it one of the most comprehensive cloud providers in Asia.

Secondly, there are product and technical capabilities. According to the report "The Forrester Wave: Public Cloud Platforms in China 2024" released in August, Alibaba Cloud is positioned as a leader alongside Amazon AWS, Microsoft Azure, and Google GCP, ranking second globally in terms of products and strategy.

In terms of services, Alibaba Cloud has built two global service centers, four regional service centers, and 18 local service teams worldwide.

It is also worth mentioning the ecosystem. Yuan Qian stated that in Southeast Asia and other regions, Alibaba Cloud has its own partner advantages, supported not only by its own strength but also by many local partners.

Challenges are also evident. As a service provider, Alibaba Cloud's business largely depends on the situation of domestic enterprises going overseas. At the same time, the biggest uncertainty faced by cloud computing vendors still comes from data security and compliance challenges, which are influenced by international relations, local systems, and policies.

After 15 years of establishment, Alibaba Cloud has officially become the core strategic business of Alibaba Group and will represent Alibaba in the international market. This will determine whether Alibaba can surpass the glory of its former e-commerce king status and become a truly globally influential technology giant.

The road to going overseas is long and arduous; Alibaba Cloud is set to embark on its journey once again