Foreign companies urged to move data centers to China

Apple will "have to" speed up its pace and put some of its business data centers in China.

In mid-January this year, Apple CEO Tim Cook was interviewed by Beijing Mayor Anshun when he visited China. Wang deliberately spent a lot of time introducing several data center projects in Beijing, according to people familiar with the matter.

At roughly the same time last year, the two had met, Wang said at the time, "I hope the two sides will take the opportunity of Apple's investment and Development center in Beijing to deepen cooperation." "This sparked speculation in the media that they even thought Apple had a choice of two domestic data centers: Zhangjiakou and Inner Mongolia.

Apple has been trying to speed this up, because at the moment only the App store is the only business in China, still in the "Grey zone" (China's policy is to set up a joint venture), the vast majority of Apple's business data management is abroad, which seriously affected Apple's user experience. In 2012, Apple built a large data centre in Hong Kong, essentially for the Chinese market, but, given the cost of electricity in Hong Kong, they did not feel that the strategy was sustainable.

And the confusion with most multinationals is that Apple is a proprietary business around the world, without the concept of a joint venture, and the Chinese government's requirements are not in line with Apple's guidelines.

But "The Snowden incident" accelerated all this. Brazil's House of Commons has just passed the draft anti-Cyber Espionage Act, which requires foreign communications networks to store data and communications from Brazilian users on servers in Brazil. The European Union is pushing for similar laws, although the Chinese government has not made a clear statement, but from the feedback of a number of relevant companies contacted by the Economic Observer, the legislative work should have begun.

So there are more than one apple in an international company "urged" by the government. "According to the current situation, foreign companies must be laid out in advance, the trend is already very clear, who do not start to prepare, once the policy has been introduced, lose the opportunity." "said an industry person who declined to be named.

How hard is it to come in?

In fact, international companies, including Microsoft and Amazon, which have entered China, have begun to examine China's opportunities 5 years ago. These companies do not understand the specificity of China's policies, Jong Yongkang, the global vice president of Amazon, told our correspondent that Amazon had been in China for three years before he joined Amazon in 2012 to start concrete operations on the ground. They met with officials from various levels of government to seek policy help.

But at the time, the Chinese government did not have much concept of the data center and the deeper cloud computing [note]. Until now, 80% of China's data center resources are owned by three telecommunications operators, and most private cloud computing companies rely mainly on leasing operators ' data centers to carry out their business. "Abroad already has a mature industrial chain, from digital real estate, to server hosting business, and then to cloud computing services, at every level there are many companies involved." Wang, Chairman and CEO of the Blue flood season, said, "but China is basically stuck in the simple business of renting cabinets, not that international companies don't want to go in, and that these infrastructures are completely inadequate." "When Google entered China in 2005, he talked to him about his needs," they say, and they said they don't know who they are. ”

In addition to the 2011, because of "internet pornography", "mobile phone suction fee", "telecommunications corruption" and other issues, the Ministry of Information has stopped the IDC (Internet Data Center) and ISP (Internet service provider) licensing. This is the two necessary licences for cloud computing in China, so several big international giants have had to scramble for some of the most licensed companies to enter China's "landing point."

But a few local governments that have felt the pressure of the "data age", such as Shanghai, which worked with Microsoft, and Beijing, which worked with Amazon, have started to "push" international companies into China.

Amazon's "Front shop" (selling, research and development and the service to the network delay is not high in Beijing, a large number of data centers in Ningxia model is from Beijing Zhongguancun Management Committee party secretary Gou Zhongwen's attempt, he has been in several areas around Beijing have done similar attempts. And after communicating with Amazon, he personally led the Ningxia Autonomous Region government and other parties in a very short period of time to complete the entire landing process. In fact, the government's leading role is very obvious. "Jong Yongkang said.

So is Shanghai. The Shanghai government was also one of the signatories in November 2012 when the Microsoft public Cloud [note] served Azure. After that, Microsoft has invested and received a lot of resources in the project of "Smart city" in Shanghai.

In the case of Apple entering China, Beijing is clearly in the top position, even cities including Shanghai are fighting for it. However, Apple has been cautious, according to people familiar with the matter, Apple's vice-president-level executive once came to China, made some vague commitments to China, the result was quickly dismissed, "Apple is still assessing the value of some things." ”

Early last year, for example, they started working with CDN (Content distribution network) vendors in China to speed up app downloads. If it hadn't been for the Chinese government to change its stance on the "Snowden incident", it would have been able to use the Internet to accelerate its move to China instead.

Government Mania

The central government's attitude seems to be getting clearer a few direct changes are that the institutions under the ministries are starting to have a number of related topics, and executives from international companies already operating in China will be regularly interviewed by the Ministry of Industry to report on a cycle of work; government-level units are laying cloud computing at all levels, almost weekly, There are "local governments working together with a manufacturer to build data centers," a similar news broke out.

Moreover, the Government is no longer a concept of cloud computing, and some even know how to "pilot" the underlying policy.

After the launch of the Blue flood season in 2010, the government of Beijing's Shunyi district took a piece of land in the bonded zone for the construction of so-called "digital real estate". This American very popular business model has not been in China before, it is not a complete IDC, just provide the server room and water and electricity infrastructure, customers can put their own servers inside, of course, can rent the blue flood.

After a chance, Beijing customs learned about the project, Wang was invited to report to the Deputy director, "They are very sensitive to the business, there are many traditional IDC companies are bidding on them." ”

Customs has two puzzles: one is the fragmentation of E-commerce, "The electric dealer is not a commodity trading, a pair of trousers or a book, may only collect a few cents of duty, but the cost is very high, because you do not know where to pay, and Cross-border E-commerce in the future will become a trend." ”

The second is the importation of virtual goods, such as movies, music, games, "more and more large, but with the customs have no relationship." Wang said, "Cross-border E-commerce has been very hot, many people do not want to evade tax, they are willing to pay taxes, but no one to manage." Customs is to make this cross-border transactions standardized, convenient, such as the tax is not so complex, the next single when the direct deduction and so on. "Customs need to use the cloud to solve these problems through the Blue Flood project," he said.

Then there are other government departments involved, and they are now even trying to set up offshore data centers, the government often said the "border customs." This would be a better choice for international companies because they have more autonomy in putting data centers here. And some Chinese internet companies that want to develop abroad will not be hindered by foreign governments.

"But it's all just a pilot, and it depends on how far the country's policies can go." "Wang said. Even so, including Shanghai, Guangdong, Chongqing, Tianjin and other regions of similar departments are in contact with the blue flood, they also want to copy the project in Beijing to their respective bonded area, empty port.

Because it's a big temptation for the international giants. At least in the bonded area, all servers and other equipment can enjoy tax rebate and tax exemption policy, the proportion is probably in 15%-17%. This is enough to offset the cost of international companies moving data centers to China. If "Offshore data" can be achieved again, China's policy conditions will be very competitive.

The enthusiasm of governments everywhere is surprisingly high, and the simplest starting point is to attract international giants in this way, with considerable tax revenue. Moreover, a city with a "cloud computing" label clearly has more international clout, which directly affects its investment in other areas.

But the central government may have a deeper perspective, after all, by the end of last year, China's IDC industry has a scale of 26.78 billion yuan (data from the Ministry of Telecommunications Research Institute), which is far below the level of the United States. The most direct difference is that the United States does not have "IDC" the industry, because it is too small.

"The central government needs to consider whether this series of policies can really push the industry forward, rather than just being a local government chip," he said. "So how Apple deals with the data in the Chinese market can reflect the Chinese government's thinking very accurately," said the unnamed industry official. ”