China’s largest Internet company, Alibaba, is adding to its modest presence in Silicon Valley, but not in the way many have expected.
In an announcement on Wednesday, the Chinese e-commerce giant said it planned to open its first data center outside of China in Silicon Valley. Instead of supporting the company’s hugely popular e-commerce sites, the center will help Alibaba spread a less well-known but growing side of its business: cloud services for businesses.
Similar to the services offered by Amazon that lease computing power to businesses, Alibaba has been slowly wooing clients in China to use its services. Many vendors who sell on Alibaba’s e-commerce sites use the services, but it has been slowly adding larger clients.
The company said the new data center would first cater to Chinese businesses operating in China, but in the second half of the year do more to aim at foreign clients. The company did not specify when the center would open, how much it was investing in the center, or how large it would be.
Using the name Aliyun to refer to the company’s cloud operations, Ethan Sicheng Yu, a vice president, said: “Aliyun hopes to meet the needs of Chinese enterprises in the United States, and the ultimate objective of Aliyun is to bring cost-efficient and cutting-edge cloud computing services to benefit more clients outside China to boost their business development.”
Though Alibaba has a significant share of the market selling computing services to businesses in China, it’s an open question whether the company can win over more foreign clients. A Chinese company first, it will have to put into place English-speaking staff members to support and sell to the businesses, while also making its software easy to use in other languages.
Still, with a labor force primarily in China, the company may be able to compete on cost. It will also no doubt get a boost from the growing number of Chinese companies that are seeking to invest and advertise in the United States.