Supporting China’s Digital Business Infrastructure Needs
China represents a key market for global digital infrastructure business users, and according to Technavio, the country’s data center segment is set to grow by US$55.30B from 2020 to 2025. Last year, EdgeConneX entered into a new partnership through a strategic investment in one of China’s leading data center providers, Chayora. Through Chayora’s data center offerings in Beijing and Shanghai, EdgeConneX customers have an ideal data center partner that can support their digital infrastructure needs in China.
Kelvin Fong, EdgeConneX Managing Director for Asia-Pacific, recently sat down for a chat with Oliver Jones, CEO and Co-Founder of Chayora, to discuss developing trends in this rapidly growing market.
Kelvin Fong: What are some of the trends that are driving the growth of the data center industry in China?
Oliver Jones: China is very much like everywhere else in the world in that digital infrastructure is a major part of the way that we all do business. So, it’s about streaming, it’s about social media and it’s about e-commerce. But very importantly, China is driving forward in a number of other areas as well, including artificial intelligence, smart cities, and autonomous vehicles. In these areas China is on the leading edge of innovation and embraces transformative developments boldly.
For example, many new city districts are now being designed from the ground up to be technology-based for residents and businesses based there. China has nearly 800 smart city projects underway or in planning: representing around half the total number worldwide. Similarly, just this month, August 2022, Baidu announced the commencement of its first wholly driverless ‘robotaxis’ following the granting of formal permits for its service in Chongqing and Wuhan. Smart cities and autonomous cars will be generators of huge volumes of data nationwide.
KF: What are some of the opportunities and challenges you see as computing power demands continue to grow?
OJ: We’re seeing a challenge in terms of power and energy with the world crises at the moment. While power infrastructure has been stepping up to meet the demands of digital requirements during the pandemic, I think the challenge worldwide will increasingly be the extent to which the immense amounts of electric power and water, are available to support increasingly large data center campuses and increasingly high-density computing. That’s the real challenge in most countries and China is no different.
KF: Could you share more about Chayora’s data center offerings?
OJ: We started out with the aim to provide a world class experience for international companies initially coming into China to create data center campuses, the scale of which was rarely seen at that time in other parts of the world. Today, we are developing two hyperscale campuses. The first is outside Beijing where we will have up to 25,000 racks available on our Tianjin site that serves the greater Beijing area which supports between 140 and 180 megawatts of IT load. We also have a smaller but similarly significant campus outside Shanghai, providing around 10,000 racks for around 48 to 54 megawatts of IT load. Our go-to-market focus has now broadened to include the biggest Chinese tech firms and we’re working to supply accommodation to both the international business community and also some of the really large and fast-growing domestic companies in China today.
KF: China’s internet industry is developing at a speed that has never been seen before. How do you see the partnership between Chayora and EdgeConneX supporting the rising demand for digital infrastructure in China?
OJ: The demand for digital infrastructure in China is characterized in different ways, depending on international or domestic businesses, and the relationship that we’ve entered into with EdgeConneX is important in both respects. For international companies, EdgeConneX’s credibility and track record with some of the world’s biggest cloud and enterprise players is massively important, as they look for trusted partners to work with in China, and the Chayora and EdgeConneX combination sends a really powerful message.
But equally the rapidly expanding domestic Chinese companies that we’re talking to today, the ‘future Alibabas and Tencents’ who are the next generation cloud and application leaders, they need to know that having created a dominant domestic position they too can go global. EdgeConneX is a key route to enabling us to help them build their businesses and compete on the world’s biggest stage.
KF: Are you seeing more demand from hyperscalers or from enterprises?
OJ: Today, the demand is coming from both hyperscalers and enterprises. The volume is with hyperscalers with the shift that continues to public and hybrid cloud being a really consistent theme. However, certain sectors, particularly the manufacturing sectors such as the automotive sector, and the banking sector, demonstrate that there’s still significant enterprise demand out there. A mixed customer economy is something that’s a key feature for us. We’re not a co-location provider per se, but we can offer co-location for organizations that need a smaller footprint to start with before they can grow and become perhaps one of the next smaller but ambitious hyperscalers thereafter.
KF: What is the impact of China’s regulatory measures on the industry? And how are they affecting customer considerations?
OJ: China is a notable country when it comes to regulation and is unique in many respects in that you can’t serve the online markets in China unless you are licensed in China and you have your data centers inside the national firewall. International companies that want to be in China will obviously need to work according to the laws of the country and that’s something that we do fastidiously. We want to ensure that we can help these international companies that may have much less experience than we do, in terms of dealing with these regulations to become informed about and comfortable with them. We directly hold all the required telecommunications licenses – such as ISP and IDC – and also the very important cloud services IRCS license that’s critical for go-to market solutions.
One of the areas that we’re focused on in regulatory terms is ensuring that we bring both international standards and assured consistency of standards. In China we’ve always set out to ensure that we adhere to defined and objectively measurable standards, like China Class A for example in the domestic market, and very importantly we have received the internationally recognized Uptime Institute Tier III certification for design, construction, operations and maintenance for all our live data centers. Particularly importantly, we’re the first and still the only OCP (Open Compute Project) accredited facility in China. As any data center market gets bigger and more mature, customers increasingly look for reference points and credible objective standards and we know the Chinese government is looking for that in supplement to the regulatory objectives that are mentioned above.
KF: Do you see a greater focus on sustainability when it comes to the development of data centers in China, and what is driving this?
OJ: Sustainability is a massively important feature around the world and China is no different. China recognizes the importance of dealing with finite energy resources, and for many years now has had policies and principles that set out the basis on which any new data centers need to perform. So, they have at a very basic level, a maximum PUE, that organizations operating data centers have to operate below in order to maintain their licensing and get their project registration. What we’re trying to do, though, is go beyond that, we’re trying to bring the best of international solutions together with the best of domestic solutions. The way that we can collaborate and take the data center industry, hopefully to new standards, bringing in some of the best experiences that we’ve had and adding to that what EdgeConneX have had is a really important way that we can make a difference. We do work very closely with central and local government to help them achieve their targets and we think sustainability is a key competitive advantage for our business. We already offer 100% renewable power (from grid supplied wind power resources) on either of our sites to any of our customers that would like it, and that’s an important offering.
KF: China aims to achieve carbon neutrality before 2060. How are data centers reducing their carbon footprint?
OJ: The only way that we can really improve our carbon footprint, in direct terms, is by ensuring that we run and build the most efficient data centers that we can. Achieving very efficient world class PUEs is a really important part of that journey but equally when we’re in the construction stages, having progressive policies that are associated with waste materials minimization and handling – using materials that are derived from renewable materials as well – is an important consideration for us to take into account. We also do encourage any customer talking to us to look at the renewable power offer that we’ve got. We’re not directly developing the renewable power sources but the more we can increase the demand, the more that demand can be translated into power generation sites by others and the more we can help China achieve that important goal on or before 2060.
We’re just getting into the 14th Five-Year Plan, signed off by the government last year in 2021, which is the planning mechanism that the China government has used in respect of its development of the economy and development of society, over each successive five-year period since first originated in the 1950s under Chairman Mao. An important element of the latest one is that there’s a very significant point of emphasis around sustainability and digital infrastructure, both in separate activity streams, where weaving these together is an important way that we can play our part in helping China achieve its goals in respect of its carbon neutral objectives. We’re aligned with those objectives and we know our customers, and international customers, perhaps particularly coming into the country want to be seen to supporting those achievements as well.
KF: One final question – something a little more light-hearted. EdgeConneX has an employee book club and is always on the lookout for good reading material. Which three leadership books would you recommend?
OJ: Well, I think there are lots of important leadership books that one can consider and they go back to Machiavelli’s ‘The Prince’ and the ancient readings of China such as Sun Tzu’s “Art of War” – both of which I recommend. But one modern one to make up the three is a great book titled “The Age of Surveillance Capitalism” by Shoshana Zuboff, which is all about how we as humans will operate increasingly closely with and perhaps fight with the new frontier of power and how this will really transform society. It’s not a light read but I’d certainly recommend it.
For more information on the Chayora-EdgeConneX Alliance, click here.