Fierce Domestic Cloud Market: 'Jung Cloud' Approaches

Alibaba·Tencent, etc.
'China Cloud'
Increasing Influence in Korea

Tencent's Triple-Digit Growth This Year
Domestic Workforce Expected to Double
Alibaba to Build First Data Center Next Year

Market Size 2.78 Trillion KRW Last Year
Expected Growth of About 1 Trillion KRW Next Year
Naver·KT·NHN
Competing Against Overseas Operators

Big tech companies from China, such as Alibaba and Tencent, are eyeing the domestic cloud market. Following the entry of the American Amazon Web Services (AWS), the participation of Chinese companies is expected to intensify the competition among domestic and international ICT companies surrounding the domestic cloud market.

The 'China Cloud' Offensive Has Begun

According to industry sources on the 24th, Alibaba Cloud and Tencent Cloud, collectively known as the so-called 'China Cloud,' are gradually expanding their influence in the domestic market. Tencent Cloud recorded triple-digit growth rates in the domestic market this year. With 68 availability zones worldwide, the company opened its second availability zone in Korea last December and has begun full-scale market expansion. Tencent Cloud recently announced plans to more than double its workforce in Korea and continue investing.

Tencent, the largest game publisher in China, dominates the cloud market centered on domestic game companies. Major Korean game companies such as Nexon, Netmarble, Krafton, Wemade, and Webzen use Tencent Cloud services. In addition, Tencent Cloud has also ventured into the public sector with projects involving the Incheon Tourism Organization and Korea Railroad Corporation (KORAIL). Foshu Ying, Senior Vice President of Tencent Cloud International, stated, "Next year, we plan to promote various collaborations with Korean companies and institutions based on high-quality, high-performance cloud technology."

Alibaba is also set to establish its first data center in Korea in the first half of next year. This data center will utilize Alibaba Cloud's self-developed supercomputing engine, 'Apsara,' enabling services from storage and networking to machine learning and data analysis. Alibaba Cloud has secured 80 availability zones worldwide and ranks as the third-largest cloud provider globally. It is growing stronger while maintaining the number one market share in the Asia-Pacific (APAC) region, centered on the Chinese-speaking market.

The 'China Cloud' is particularly targeting domestic companies that have entered the Chinese market. An industry insider said, "Domestic operators have no choice but to rely on either Alibaba or Tencent when doing business in China, creating a structure dependent on the 'China Cloud.'" In fact, Alibaba Cloud supports the business of Amorepacific's Chinese subsidiary. Alibaba explained, "We can conduct effective marketing by precisely targeting customers in the Chinese market."

Domestic and Global Companies in a Fierce Competition

According to market research firm Gartner, the domestic cloud market size is expected to grow from 2.7818 trillion won last year to 3.7238 trillion won next year. Amid this growth, global companies such as Amazon Web Services (AWS), Google, and recently Chinese companies Alibaba and Tencent are expanding their availability zones in Korea, putting significant effort into entering the Korean cloud market. From the perspective of China Cloud, Korea is physically close and easy to target by leveraging the Chinese consumer market.

Domestically, companies like Naver, KT, and NHN are fiercely competing against overseas operators such as AWS. Naver is solidifying its position mainly among public institutions and domestic companies, leveraging its brand image as the number one domestic portal operator. According to Naver Cloud, it currently has over 60,000 customers. KT is strengthening its foundational capabilities by owning 14 Internet Data Centers (IDCs). NHN has spun off its cloud business into a separate corporation and is actively expanding its operations.

Although the prevailing sentiment is that Chinese companies are not yet at a threatening level, there is a view that a generational shift could begin using price competitiveness as a weapon. An industry insider said, "Chinese companies are improving minor negative images such as security prejudices, and since certain services are much cheaper, they could become a threatening presence in the future."

This content was produced with the assistance of AI translation services.