Internet Data Center Market in China

Internet Data Center in China Trends and Forecast

The future of the internet data center market in China looks promising with opportunities in the BFSI, IT & telecommunication, government, healthcare, retail, and manufacturing sectors. The global internet data center market is expected to grow with a CAGR of 12.5% from 2024 to 2030. The internet data center market in China is also forecasted to witness strong growth over the forecast period. The major drivers for this market are the growth of the digital economy, the increasing preference for hybrid data centers, and the expanding adoption of IoT technology across various industries.

• Lucintel forecasts that, within the type category, the enterprise data center is expected to witness the highest growth over the forecast period.





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Emerging Trends in the Internet Data Center Market in China

China is rapidly becoming a global leader in the internet data center (IDC) market. With its booming digital economy, massive internet user base, and government support for infrastructure development, the demand for data center services is growing exponentially. The market is evolving with the increased adoption of cloud computing, edge computing, and sustainable practices. Additionally, the country’s stringent regulatory landscape, along with advancements in AI and 5G technologies, is reshaping the data center sector. These emerging trends highlight how China is transforming into a key hub for data services in Asia and beyond.

• Cloud Computing Expansion: The rapid growth of cloud services in China is driving a massive increase in demand for data center facilities. The country’s cloud market is one of the largest in the world, with major players such as Alibaba Cloud, Tencent Cloud, and Huawei Cloud investing heavily in expanding their data center infrastructure. Data centers are being developed to handle the ever-growing needs for storage, processing, and scalability in the cloud, particularly for industries like e-commerce, finance, and healthcare. As a result, China is seeing a rapid rise in both public and private cloud data centers.
• Growth of Edge Computing: Edge computing is becoming a critical part of China’s digital infrastructure as it helps to address the growing need for low-latency and real-time data processing. The expansion of 5G networks, the Internet of Things (IoT), and artificial intelligence (AI) applications is creating a massive need for distributed computing resources closer to the end-users. As a result, many data centers are being built in smaller, decentralized locations to support edge computing, thus reducing latency and enabling faster decision-making for applications in sectors like autonomous vehicles, manufacturing, and smart cities.
• Green and Sustainable Data Centers: Environmental concerns and governmental policies are pushing data centers in China toward greater sustainability. China has set ambitious goals to reduce carbon emissions, and data centers are increasingly adopting green technologies such as renewable energy sources, energy-efficient cooling systems, and water-saving measures. The shift toward sustainable practices is also being driven by both domestic and international companies that are prioritizing eco-friendly solutions. Data centers that meet green certifications and adhere to strict environmental standards are becoming more competitive in the market, attracting clients who value sustainability.
• Government Regulations and Data Sovereignty: China’s regulatory environment is heavily shaping the development of the data center industry. With laws such as the Cybersecurity Law and the Data Security Law, the government is mandating stricter data protection and localization requirements. These regulations require that certain types of data be stored within China’s borders, pushing for the growth of localized data centers. These regulations are also driving investments in high-security facilities, as companies need to comply with the government’s rules on data sovereignty, privacy, and national security.
• Integration of AI and Automation in Data Centers: The use of artificial intelligence (AI) and automation in the operation of data centers is growing rapidly in China. AI is being used to optimize data center operations by improving energy efficiency, predicting hardware failures, and automating routine maintenance tasks. Machine learning algorithms and real-time analytics help data center operators to better manage resources and minimize operational costs. Automation is also being used to improve scalability and service delivery, making China’s data centers more responsive and capable of handling massive amounts of data from diverse industries.

The emerging trends in China’s internet data center market, including cloud computing expansion, edge computing growth, sustainability initiatives, regulatory changes, and AI-driven operations, are transforming the sector. These trends are not only reshaping the way data centers are designed and operated, but they are also positioning China as a global leader in digital infrastructure and services. The future of the data center market in China will be shaped by these innovations, contributing to its growing digital economy.

Recent Developments in the Internet Data Center Market in China

China’s internet data center market has witnessed significant developments over the past few years, driven by advancements in cloud technology, government initiatives, and the growing demand for digital services. Key developments reflect the ongoing transformation in the country’s technological infrastructure, supporting the surge in data generation from various sectors. These developments are positioning China as a hub for global digital infrastructure, influencing data center investments, innovations, and expansion strategies across the region.
• Massive Expansion of Cloud Data Centers: Major cloud service providers in China, such as Alibaba Cloud, Tencent Cloud, and Huawei, have significantly expanded their data center networks to meet the demand for cloud computing. These expansions include building state-of-the-art facilities across the country, with a focus on scalability, security, and performance. The increasing adoption of cloud services, especially by enterprises in finance, healthcare, and manufacturing, is driving this growth. These investments are helping to solidify China’s position as one of the largest cloud markets in the world.
• Development of 5G-enabled Data Centers: The deployment of 5G technology in China is accelerating the need for advanced data centers. 5G networks are generating large volumes of data that require low-latency, high-performance processing. As a result, China is seeing the construction of new data centers that are optimized to handle the demands of 5G applications, such as autonomous vehicles, augmented reality, and smart cities. These 5G-enabled data centers are expected to support a wide range of industries that require real-time data processing.
• Focus on Green Data Centers: The push for sustainability in China’s data center market has intensified with the government’s focus on carbon reduction and green energy initiatives. Several major data center operators are adopting renewable energy sources like wind, solar, and hydroelectric power to reduce their environmental impact. Additionally, cooling systems are being optimized for energy efficiency to cut down on electricity consumption. This trend is attracting international clients that prioritize sustainability in their supply chains and are increasingly seeking eco-friendly data hosting options.
• Regulatory Shift Towards Data Localization: China has implemented stricter regulations regarding data storage and processing, which have significant implications for the country’s data center market. Laws such as the Cybersecurity Law and Data Security Law require certain types of data to be stored within China’s borders. This regulatory shift has led to a boom in the construction of localized data centers across the country, as multinational companies seek to comply with the new data sovereignty rules. The increase in regulatory compliance needs is reshaping the data center landscape in China.
• Rise of Data Center Clusters in Tier-2 and Tier-3 Cities: To accommodate the growing demand for data services, China is witnessing a rise in data center clusters outside of the major metropolitan areas like Beijing, Shanghai, and Guangzhou. Tier-2 and Tier-3 cities, such as Chengdu and Hangzhou, are becoming hotspots for data center development due to lower costs and favorable government policies. These regional clusters are strategically positioned to provide faster, more reliable services to local enterprises and contribute to reducing data traffic congestion in major urban areas.

Recent developments in China’s internet data center market, such as the expansion of cloud services, 5G-enabled infrastructure, sustainability efforts, regulatory changes, and the growth of regional data center clusters, are shaping the country’s digital future. These developments reflect China’s ambition to solidify its position as a global leader in the data center industry while meeting the growing demand for digital services across industries.

Strategic Growth Opportunities for the Internet Data Center Market in China

The internet data center market in China presents numerous strategic growth opportunities, driven by technological advancements, the shift to cloud-based services, and regulatory changes. Data center operators can capitalize on these opportunities to enhance their market position, attract international clients, and contribute to China’s expanding digital economy. These growth opportunities reflect the need for scalable, secure, and efficient data infrastructure to support the country’s rapid technological development.

• Cloud Computing Services and Infrastructure: The continued growth of cloud computing in China presents a significant opportunity for data center operators to expand their offerings. As businesses increasingly move to the cloud for storage, processing, and computing power, data centers can position themselves as the backbone of this digital transformation. By investing in cloud-enabled data center infrastructure and offering scalable, high-performance services, operators can attract businesses from various sectors, including finance, healthcare, and government, which are adopting cloud solutions to enhance efficiency and agility.
• Edge Computing and Low-latency Services: The rise of IoT, AI, and 5G technologies is creating a growing need for edge computing, which reduces latency by processing data closer to end-users. Data center operators can capitalize on this trend by developing edge data centers in key locations across China, particularly near urban centers and industrial hubs. Edge computing allows businesses to offer real-time services, such as autonomous driving, smart manufacturing, and augmented reality, making this an essential area for investment and expansion in China’s digital infrastructure.
• Green and Renewable Energy Solutions: As China moves towards more sustainable energy practices, there is a significant growth opportunity for data center operators to invest in renewable energy sources. By using wind, solar, and hydroelectric power to operate data centers, operators can not only comply with government regulations but also attract environmentally conscious customers. Green data centers are becoming increasingly attractive to international companies that are prioritizing sustainability in their operations, making this a strategic growth opportunity in the highly competitive data center market.
• Regulatory Compliance and Data Localization: With China’s focus on data sovereignty and stricter data protection laws, there is a growing demand for localized data centers that comply with national regulations. Operators can tap into this market by offering data hosting services that meet the requirements of China’s Cybersecurity Law and Data Security Law. The growing need for secure and compliant data storage solutions presents a significant opportunity for data centers that are well-equipped to handle the complex regulatory environment in China.
• 5G and Telecommunications Infrastructure: The rollout of 5G technology in China is expected to generate massive volumes of data, which will require high-performance, low-latency data center services. By investing in infrastructure that supports 5G applications, data center operators can position themselves to support the next wave of digital transformation in sectors like autonomous vehicles, smart cities, and the industrial internet. Operators can expand their service offerings to include high-speed data processing and storage solutions tailored to 5G-powered applications, creating new revenue streams and partnerships.

The strategic growth opportunities in China’s internet data center market, including cloud services, edge computing, sustainability initiatives, regulatory compliance, and 5G infrastructure, offer significant potential for data center operators to grow and expand. By aligning with these opportunities, operators can play a crucial role in supporting China’s ongoing digital transformation while tapping into the increasing demand for high-performance and secure data services across industries.

Internet Data Center Market in China Driver and Challenges

The internet data center market in China is influenced by various drivers and challenges, which include advancements in technology, regulatory changes, economic factors, and environmental considerations. These drivers are fueling the growth of the data center market, while the challenges present potential risks to operators. Understanding both the drivers and challenges is crucial for stakeholders looking to capitalize on the opportunities in China’s digital infrastructure sector.

The factors responsible for driving the internet data center market in China are:
• Rapid Growth of Cloud Services: The rapid expansion of cloud computing services in China is one of the main drivers behind the growth of the data center market. As businesses and consumers increasingly rely on cloud infrastructure, the demand for data storage and processing capabilities has surged. This growth is supported by major cloud service providers, such as Alibaba Cloud, Tencent Cloud, and Huawei, who are expanding their data center networks across China to meet the growing demand for cloud-based solutions.
• Advancements in 5G Technology: The rollout of 5G technology in China is creating new opportunities for data centers. With the demand for low-latency, high-bandwidth services, particularly in sectors like autonomous vehicles, smart cities, and augmented reality, 5G is pushing the need for localized, high-performance data centers. The expansion of 5G networks is a critical driver for the data center market, as it increases the volume of data generated and processed, further fueling the demand for advanced infrastructure.
• Government Support and Infrastructure Investment: The Chinese government plays a significant role in driving the growth of the data center market through investments in digital infrastructure and favorable policies. These investments include support for 5G networks, smart cities, and the digital economy. The government’s regulatory framework is also pushing for data localization, which has accelerated the construction of localized data centers. These initiatives contribute to the overall expansion of China’s data center sector.
• Sustainability and Environmental Awareness: The growing demand for green and energy-efficient data centers is driven by both regulatory pressures and consumer preferences for sustainability. As China focuses on reducing its carbon footprint, data center operators are adopting renewable energy sources, improving energy efficiency, and minimizing environmental impact. The shift toward eco-friendly solutions is creating new market opportunities and allowing operators to differentiate themselves by offering sustainable data services.
• Increase in IoT and Big Data Applications: The explosion of Internet of Things (IoT) devices and big data analytics is driving the demand for data centers in China. These technologies require large amounts of data processing and storage, which in turn drives the need for scalable and reliable data center infrastructure. The increasing adoption of IoT across industries like manufacturing, healthcare, and logistics is creating new opportunities for data center growth.

Challenges facing the internet data center market in China are:
• High Energy Costs: Data centers are highly energy-intensive, and China’s energy costs can be a challenge for operators. While renewable energy adoption is growing, the initial investment in green infrastructure and the ongoing costs of energy-efficient technologies can be prohibitive. High energy costs can reduce profit margins and make it difficult for smaller players to compete.
• Regulatory Compliance Complexity: The regulatory environment in China can be complex, particularly for foreign companies. Compliance with data sovereignty laws, cybersecurity regulations, and environmental standards can be challenging. Data center operators must invest in legal expertise and infrastructure to ensure compliance with these regulations, adding to operational costs.
• Land Availability and Space Constraints: As demand for data centers grows, land availability in major cities like Beijing, Shanghai, and Shenzhen is becoming increasingly limited. The high cost of real estate and competition for prime locations make it difficult for operators to expand their facilities. This challenge is prompting some operators to explore less central locations or invest in vertical data center designs.

The major drivers of China’s internet data center market, including the growth of cloud services, 5G technology, government support, sustainability initiatives, and the rise of IoT and big data, are all contributing to the sector’s rapid growth. However, challenges such as high energy costs, regulatory complexity, and land availability need to be addressed for operators to succeed. By navigating these drivers and challenges, China’s data center market will continue to play a pivotal role in the country’s digital transformation.

List of Internet Data Center Market in China Companies

Companies in the market compete on the basis of product quality offered. Major players in this market focus on expanding their manufacturing facilities, R&D investments, infrastructural development, and leverage integration opportunities across the value chain. Through these strategies internet data center companies cater increasing demand, ensure competitive effectiveness, develop innovative products & technologies, reduce production costs, and expand their customer base. Some of the internet data center companies profiled in this report include-
• Company 1
• Company 2
• Company 3
• Company 4
• Company 5

Internet Data Center Market in China by Segment

The study includes a forecast for the internet data center market in China by type and end use.

Internet Data Center Market in China by Type [Analysis by Value from 2019 to 2031]:

• Colocation
• Hyperscale
• Edge
• Cloud Data Center
• Enterprise Data Center
• Micro Data Center
• Others

Internet Data Center Market in China by End Use [Analysis by Value from 2019 to 2031]:

• BFSI
• IT & Telecommunication
• Government
• Healthcare
• Retail
• Manufacturing
• Others

Features of the Internet Data Center Market in China

Market Size Estimates: Internet data center in China market size estimation in terms of value ($B).
Trend and Forecast Analysis: Market trends and forecasts by various segments.
Segmentation Analysis: Internet data center in China market size by type and end use in terms of value ($B).
Growth Opportunities: Analysis of growth opportunities in different type and end use for the internet data center in China.
Strategic Analysis: This includes M&A, new product development, and competitive landscape of the internet data center in China.
Analysis of competitive intensity of the industry based on Porter’s Five Forces model.

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FAQ

Q1. What are the major drivers influencing the growth of the internet data center market in China?
Answer: The major drivers for this market are the growth of the digital economy, the increasing preference for hybrid data centers, and the expanding adoption of IoT technology across various industries.
Q2. What are the major segments for internet data center market in China?
Answer: The future of the internet data center market in China looks promising with opportunities in the BFSI, IT & telecommunication, government, healthcare, retail, and manufacturing sectors.
Q3. Which internet data center market segment in China will be the largest in future?
Answer: Lucintel forecasts that, within the type category, the enterprise data center is expected to witness the highest growth over the forecast period.
Q4. Do we receive customization in this report?
Answer: Yes, Lucintel provides 10% customization without any additional cost.

This report answers following 11 key questions:

Q.1. What are some of the most promising, high-growth opportunities for the internet data center market in China by type (colocation, hyperscale, edge, cloud data center, enterprise data center, micro data center, and others), and end use (BFSI, IT & telecommunication, government, healthcare, retail, manufacturing, and others)?
Q.2. Which segments will grow at a faster pace and why?
Q.3. What are the key factors affecting market dynamics? What are the key challenges and business risks in this market?
Q.4. What are the business risks and competitive threats in this market?
Q.5. What are the emerging trends in this market and the reasons behind them?
Q.6. What are some of the changing demands of customers in the market?
Q.7. What are the new developments in the market? Which companies are leading these developments?
Q.8. Who are the major players in this market? What strategic initiatives are key players pursuing for business growth?
Q.9. What are some of the competing products in this market and how big of a threat do they pose for loss of market share by material or product substitution?
Q.10. What M&A activity has occurred in the last 5 years and what has its impact been on the industry?
For any questions related to Internet Data Center Market in China, Internet Data Center Market in China Size, Internet Data Center Market in China Growth, Internet Data Center Market in China Analysis, Internet Data Center Market in China Report, Internet Data Center Market in China Share, Internet Data Center Market in China Trends, Internet Data Center Market in China Forecast, Compound Laser Companies, write Lucintel analyst at email: helpdesk@lucintel.com. We will be glad to get back to you soon.