King & Wood Mallesons

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Cloud computing: key telecommunication regulatory issues for foreign service providers in China

By Wang Rui and Qiu Shaolin

Cloud computing has become quite a hot topic for discussion over the past few years. However, although recent interest in cloud computing has increased, it is not a completely new type of service. For example, when you send an email through Gmail, or store pictures on social media websites, you are using cloud computing services. 

In China, cloud computing has experienced fast and dynamic growth in recent years. The market value of China’s public cloud computing services for the year of 2012 increased by 73 per cent compared with 2011, and the estimated market value for 2013 is expected to reach ¥6.3bn. The growth of China’s cloud computing industry has aroused great interest among foreign service providers. In May 2013, Microsoft Corporation announced that it would add several thousand employees to its workforce in China as part of a long-term investment in the cloud computing market. However, since foreign investment in the Chinese cloud computing industry is restricted, there are concerns about the short- and long-term benefits of foreign investment due to the limited participation of foreign investors in the market.

This article discusses key telecommunication regulatory issues for foreign companies that want to provide cloud computing services in China. Section I explains the term ‘cloud computing’ and three different types of service models. In Section II, the article examines the regulation of cloud computing services by foreign companies in China. Lastly, Section III discusses the recent ‘opening up’ of the IDC industry in order to reflect on the current policy trends that regulate foreign related cloud computing services in China…

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