Attracted by Huge Growth Potential
Chinese big tech firms are entering the cloud market of South Korea one after another. Tencent Cloud Korea announced on Dec. 22 that its business grew more than 100 percent this year and its investment would continue to increase next year.
Tencent Cloud built its first data center in South Korea a couple of years ago. At present, its clients in the country include a number of major game companies such as Nexon, Netmarble, Krafton, WeMade and Webzen. Its second data center in the country was opened late last year. It is planning to provide metaverse solutions in South Korea next year.
Alibaba Cloud announced in October that it would open a data center in South Korea in the first half of next year. The company, which entered the South Korean market five years ago, is planning to increase its e-commerce, financial and logistics services in the market.
U.S. cloud companies such as Amazon Web Services are already dominating the market while increasing their investment in it. For instance, Samsung Heavy Industries and Microsoft formed a digital shipbuilding partnership last month.
U.S. and Chinese cloud companies’ increasing interest in the South Korean market is because of its huge growth potential. According to market research firm IDC, the cloud infrastructure market of South Korea is expected to grow from 1.268 trillion won to 2.2189 trillion won from this year to 2025. Chinese big tech firms are facing increasing regulations in China and the United States alike and this is another reason for their increasing interest in the market.
Meanwhile, South Korean cloud companies’ overseas business expansion is pretty slow as of now. Experts point out that they need to seek opportunities in the SaaS rather than cloud infrastructure market. “The IaaS market is completely dominated by global leaders whereas the SaaS market is still a blue ocean,” one of them said.