Mainland China’s Cloud Market Spending Up 18% in Q3 2023 as Growth Rate Stabilizes

According to Canalys estimates, cloud infrastructure services spending in mainland China grew 18% year on year in Q3 2023, reaching US$9.2 billion and accounting for 12% of global cloud spend. The Chinese cloud services market remains conservative, relying heavily on government and state-owned enterprises to drive growth. Nevertheless, cloud vendors remain relentlessly focused on AI innovation and investments, consistently unveiling new AI products and solutions.  

Alibaba Cloud, Huawei Cloud, and Tencent Cloud, the top three cloud vendors in Mainland China in Q3 2023, collectively grew 22% to account for a combined 73% share of customer spending. The emphasis on nurturing and prioritizing partner ecosystems is on the rise among Chinese cloud vendors. In Q3 2023, cloud revenue generated via channels in the Chinese market accounted for 25% of total revenue, against 23% in the previous quarter.  

The Chinese cloud market may be reaching a phase of stable growth, but the top cloud vendors continue to invest heavily in AI technology, underscoring their collective commitment to embracing this growing trend. Recognizing that the progress of AI technology is intricately tied to the support of partnerships, most vendors are acknowledging the importance of fostering partner ecosystems. The innate complexity of AI technology presents challenges in terms of adoption and deployment, yet simultaneously unlocks opportunities for a broader AI ecosystem. This quarter, Alibaba Cloud and Huawei Cloud introduced AI model development platforms, allowing for the integration of third-party open-source AI models and enabling developers to access and train various models on their respective cloud platforms.   

“Achieving widespread deployment of AI technology is a nearly impossible task for vendors without the help of a range of partners. This relies heavily on an AI ecosystem that includes developers, ISVs and experts, which will be vital to deliver value for customers at scale,” said Yi Zhang, Analyst at Canalys. “Partnerships such as the ones between Salesforce and Databricks with cloud hyperscalers, including AWS and Google, indicate that cooperation between cloud vendors and service providers, as well as among different cloud vendors, is a strategic necessity. Combining technical offerings and expertise is vital for seizing market growth opportunities and driving value.”