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China racing to expand data center capacity

Michael Kan and James Niccolai | Dec. 30, 2011
China is in the midst of an unprecedented data center construction boom that's providing business opportunities for U.S. companies and could see China emerge with one of the most advanced computing infrastructures in the world.

About 80 percent of the existing capacity is in use or reserved by customers, Lau said. Many of its biggest customers are foreign financial firms, which are required by Chinese law to store data about its citizens within the country.

Government directives on carbon emissions mean data centers are being built using modern, energy-efficient technologies, Einhorn said. Some employ modular, multi-tier designs, which help to match power and cooling equipment to the requirements, in turn reducing wasted energy.

But while data centers are booming for domestic use, some are skeptical that companies will pick China as a base for providing IT services internationally. "There are questions around ownership rights for data and other assets," said IDC analyst Michelle Bailey. "It will be interesting to see if China can evolve its policies to keep in step with the market."

A former security consultant who worked on data center projects in China said foreign companies have several causes for concern. He sees three main areas of risk -- local employees absconding with data, traffic being monitored or interfered with, and the loss of equipment during sudden "inspections" by Chinese police.

"The last of these is what sets China apart from most other geographic options," and can result in the government cutting off access to equipment for several days, said the consultant, who asked not to be identified. Trying to get outside firms to host their IT infrastructure in China is "an exercise in futility," he said.

Lau said those fears are unfounded and may have been fuelled by Google's much-publicized problems in the country. As long as companies follow China's rules and regulations, they will face no problems locating data centers in China, he said.

There are other challenges too, however, such as securing adequate bandwidth and power. And China needs to keep pace with a population that is adopting PCs, smartphones and tablets at a rapid pace, said Sheldon He, a product marketing manager with Intel.

The client-to-server ratio in China is currently more than 60 to 1, he said, while in the U.S. it is closer to 20 to 1.

“China has almost five times the population of the U.S., so our problems are five times greater,” He said. “We have the world’s biggest billing systems. If we can succeed in solving these problems it could lead to innovation.”


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