Alibaba to open data center in Singapore, amid $1 billion cloud push

The Singapore facility is Alibaba's second data center outside China.

Alibaba Group's cloud business is targeting the Southeast Asian market with a new data center that will go online in Singapore this September.

The Singapore facility is Alibaba's second data center built outside China. The company has been pushing aggressively into cloud computing, with an eye toward international markets, including the U.S.

Last month, Alibaba announced a US$1 billion investment to speed up those efforts. Other data centers are being planned for Europe, Japan, and the Middle East.

As for the Singapore facility, it will also serve as Alibaba's headquarters for its international cloud business.

Although the new data center will target customers in Southeast Asia, the company has made attracting Chinese clients a priority.

Analysts have said this is probably the best approach for Alibaba, given that so many Chinese companies are also expanding into foreign markets.

Alibaba may not be as well known as U.S. cloud providers such as Amazon Web Services or Microsoft. But in China, it has a strong reputation as the country's leading cloud services provider. Already, it has 1.8 million customers from its cloud business, which include Chinese government agencies and Internet firms.

Demand has been so high that in the second quarter, Alibaba's cloud business reported 106 percent revenue growth year over year.

"Alibaba has a large existing customer base," said Jenny Hu, an analyst with research firm IDC. As these customers cross into other markets, such as Southeast Asia, Alibaba's cloud services will naturally try to follow.

But that doesn't mean the company won't face challenges. It will take time for Alibaba to understand the different markets, and adapt to the varying government policies, including those related to security, Hu said.

"They have been so focused on Chinese domestic clients, but the demands from foreign clients in other industries may be different," she added.

To show that it takes security matters seriously, Alibaba's cloud business in July vowed to protect its customers data, by publishing a pact outlining its efforts to maintain user privacy.

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Michael Kan

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