Chinese ecommerce giant Alibaba is further expanding its cloud business in Southeast Asia amid heightened domestic government scrutiny and fierce competition. The company announced it would set aside $1bn over the next three years to nurture digital skills in Southeast Asia.
At its annual Alibaba Cloud Summit, the company introduced Project AsiaForward, which aims to upskill local developers, small-to-medium-sized companies and connect businesses with venture capital. The fund will be allocated to empower 100,000 developers and the growth of 100,000 technology startups in the Southeast Asian region.
Alibaba also said it would launch its first data centre in the Philippines by the end of this year. It has also opened its third data centre in Indonesia.
Additionally, the company announced it would establish its first international innovation centre in Malaysia. In collaboration with local partner Handsprofit, the company is offering a one-stop innovation enablement platform for Malaysian small-and-medium-sized enterprises (SMEs), startups and developers looking to push the technological frontier.
“Innovative technology is critical to the recovery from Covid-19 while a strong pipeline of talent well versed in digital applications is needed to support the sustainable development of today’s digital economy,” said Jeff Zhang, the president of Alibaba Cloud Intelligence. “We are seeing a strong demand for cloud-native technologies in emerging verticals across the region, from ecommerce and logistics platforms to fintech and online entertainment.”
The tech giant’s push into the global cloud market comes amid fierce competition from both domestic and international rivals. Earlier this months, Chinese competitor Tencent revealed that it had launched internet data centres in Bangkok, Hong Kong, Tokyo and Frankfurt.
US-based Amazon Web Services (AWS), Microsoft Azure and Google Cloud remain the three primary powerhouses in the cloud industry. Over the years, the three companies have jostled for business with one another to gain a slice of a market forecasted by GlobalData analysts to be worth $948bn in 2030.
Last month, Alibaba cloud took a hit after losing ByteDance, TikTok’s parent company, as a customer. Alibaba did not explain the customer’s decision to terminate the relationship and only emphasised that it was “non-product-related.” It is, however, likely that the decision was sparked by US sanctions imposed on Chinese businesses as part of the ongoing trade war.
Meanwhile, the Hangzhou-based company also faces increased pressure from Chinese lawmakers. In April, the ecommerce behemoth was fined 18.2bn yuan ($2.8bn) by the State Administration for Market Regulation (SAMR) for abusing its market position. Subsequently, the company suffered a net loss of 5.47bn yuan ($847.5m) in its fourth quarter. This was the first quarterly loss the company had made since going public in 2014.
Alibaba’s cloud unit, however, remained profitable. Its revenue for the fiscal year 2021 grew 50% year-over-year (YoY) to 60.1bn yuan ($9.2bn), primarily driven by growth in revenue from internet customers, the public sector and finance industries.
According to GlobalData’s business analysis, Alibaba Cloud enjoyed strong revenue and earnings before interest, taxes, depreciation, and amortisation (EBITDA) growth in the past few years, with the December 2020 quarter representing the first time the business unit achieved positive EBITDA.
Alibaba is not alone in making pledges to help train countries’ citizens. Microsoft made a similar commitment to upskill Malaysia’s population in April when it announced plans to invest $1bn over the next five years to build a new data centre in the country.