China giant Alibaba launches data center in Hong Kong

PanARMENIAN.Net - Just days after filing for an initial public offering in the U.S., Chinese e-commerce giant Alibaba Group Holding is beefing up one of its lesser-known businesses: helping online merchants manage their ever-increasing data, the Wall Street Journal reports.

Alibaba, which runs online marketplaces hosting millions of merchants, said it launched a data center in Hong Kong on Monday, May 12, as a first major step to expand its fledgling cloud-computing business outside mainland China.

Revenue at its cloud-computing unit is tiny when compared with that of Alibaba’s mainstay e-commerce operations, which generate revenue through advertising and commission fees. However, as transactions on Alibaba’s sites grow rapidly, analysts say that data management services could become a major business for the company going forward.

Alibaba created its cloud-computing business unit in 2009 to respond to demand from sellers using the company’s shopping sites. Alibaba’s IPO filing last week showed that revenue from the cloud business stood at $90 million, accounting for only 1.4% of its total revenue, in the last nine months of 2013.

The launch of the Hong Kong data center also comes as Alibaba’s two main shopping sites–Taobao and Tmall– have been trying to expand outside mainland China, beginning with Hong Kong, Taiwan and Singapore. According to Alibaba’s website, the company has data centers in three mainland Chinese cities: Hangzhou, Qingdao and Beijing, the Journal says.

Investors in the U.S. and globally are watching Alibaba’s every move to decide whether to subscribe for shares in the IPO. Some analysts estimate the listing could value Alibaba between $150 billion and $250 billion, making it one of the most valuable technology companies in the world.

Alibaba said it built the new data center in Hong Kong in cooperation with a unit of Towngas, a Hong Kong gas company. Alibaba didn’t say how much it spent on the facility.