Chinese online retail giant Alibaba and Shanghai AtHub have announced that they will partner on a data center project dubbed HB33. Shanghai AtHub plans to invest approximately $134.26 million or 880 million yuan on the data center project. At the same time the board of Shanghai AtHub has elected Luo Lan to be its chairwoman.
The collaboration between Alibaba and Shanghai AtHub coincides with the former’s announcement that it will be putting up its first Indian data center in 2019. Some of the services that will be provided to customers in the world’s second most populous country include analytics, networking and elastic computing.
Alibaba’s data center in Mumbai, India will now bring the number of global zones that the Chinese online retail giant has to 33. Some of the zones are in Europe, the Middle East, Australia and Japan.
“As we build out the Alibaba Cloud network globally, India is another important piece that is now firmly in place. This continues our commitment to India, helping it to develop trade opportunities with other markets,” said Alibaba Group’s Senior Vice President and Alibaba Cloud’s President, Simon Hu, in a statement.
Currently Alibaba’s share of the worldwide cloud computing market is 3% compared to Amazon which has around 44%. At 3% Alibaba is ahead of Google Cloud whose market share is 2% but behind Microsoft Azure with a market share of 7%. Last year Alibaba’s revenues from cloud computing rose by 126.5% to reach a figure of $675 million.
Despite starting operations in India a decade ago, Alibaba has been overtaken by Amazon in online retail. But its investment in Paytm, a financial services firm, has done well. Through Ant Financial, its subsidiary, Alibaba invested $575 million two years ago when the fintech firm was valued at roughly $2 billion. Currently Paytm’s valuation is around $7 billion.
Alibaba’s increased investments in India are coming at a time when its domestic market of China is expected to record reduced growth in e-commerce. According to a Deloitte report released last year China’s growth in e-commerce is expected to decline from a rate of 46.9% recorded in 2016 to a level of 25.4% next year. India’s growth rate in e-commerce is however going to be on the uptick as it is expected to rise at a CAGR of 30% in the next ten years. By 2026 it is expected to be worth approximately $200 billion. At that time around 50% of internet users in India will be doing their shopping online.