Many of China´s businesses prefer their own private cloud rather than subscribing to public cloud services. 

By Kevin Meehan, Mark Brinda, Steven Lu, Christian Hut

Cloud computing, e-commerce and software as a service (SaaS) are hot topics and the focus of technology companies in mature and developing markets. Perhaps no market is more dynamic and complex than China, where Alibaba, Baidu and Tencent parallel global giants like eBay, Google and Facebook; where WeChat trumps WhatsApp; and where a shift away from Western suppliers has accelerated opportunities for local firms like Huawei, Inspur and ZTE.

China’s adoption of computing models and IT architectures has historically trailed that in the US, but this time lag has shortened over the past 20 years (see Figure 1). The cloud computing market is still nascent in China—it was $1.5 billion in 2013, about 3% of China’s enterprise IT market—but we expect it to grow faster than overall IT spending. By 2020, cloud spending could reach $20 billion, representing, at the high end, a compound annual growth rate of 40% to 45% that will lift it to 20% of China’s IT market (see the sidebar). Rapid growth, however, depends on overcoming several hurdles....

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