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Chinese Companies Fight for Data Storage Business

China has entered the market in cloud computing competing with U.S. service providers such as Google, Microsoft and Apple.

China has entered the market in cloud computing competing with U.S. service providers such as Google, Microsoft and Apple.

Chinese companies have begun competing with Western companies in the cloud computing and data storage market. The “cloud war” is taking place as the dispute between the United States and China about data hacking and computer network security grows stronger.

Chinese companies such as Alibaba, Baidu and Huawei are expanding within their country and gaining customers in other countries. At the same time, regulations against foreign companies in China make competing with those businesses difficult.

Security concerns

The increasing competition in cloud computing and storage worries some experts. They are concerned about the security of information.

After all, companies often use the cloud to store important, confidential information and to operate such activities as data-driven machinery, telecommunications, banking and transport systems -- including plans for driverless vehicles.

Lee Branstetter is an associate professor of economics at the Heinz School of Policy and Management of the Carnegie Mellon University.

He told VOA that many multi-national companies “have serious concerns about the protection of their intellectual property in China.”

Branstetter said some of these large companies already believe they have lost valuable information.

“All of this would give non-Chinese multinationals pause before entrusting their critical data to Chinese cloud computing service providers,” Branstetter said.

But experts say some companies simply do not have enough money to pay for the higher-cost cloud computing services sold outside China.

Sheila Jasanoff is the director of the program on science, technology and society at Harvard’s Kennedy School. She called the cloud computing industry “unruly.” In other words, the industry is not strictly governed.

“People (in the business) are making rules as they go along or taking advantage of the lack of rules,” Jasanoff said.

She said cloud computing companies are not clear about what security measures they are promising customers. She is worried that a major accident may happen before governments realize the need for stronger rules in the cloud computing industry.

“I would think a big tragedy might happen in a large airport or other facility -- like a hospital system -- and it would result in loss of life,” she said.

She believes there should be internationally-accepted rules on data security. But she does not believe an international agreement will be reached anytime soon.

Competition for U.S. businesses?

Chinese companies are creating data centers in multiple countries and trying to sell data management services throughout the world. For example, Alibaba has created data centers in the United States, Asia, the Middle East and Europe.

However, Professor Branstetter does not believe Chinese companies selling cloud services can compete with companies such as Google, Microsoft and Amazon.

He said China is an unusual country because it tries to keep out foreign data companies -- or, in his words, “digital players.”

“For this reason, I expect Chinese digital players to continue to be dominant at home, but I do not expect them to be very successful abroad,” Branstetter said.

China’s limits on foreign data companies means Chinese companies have been able to sell their services locally with little competition. As a result, these Chinese companies have captured a lot of business -- more than one-fifth of the world’s largest companies are in China, as measured by Forbes Magazine.

If foreign companies want to work in China, the government requires them to work with a Chinese company. And they must place their computer servers in China.

Some foreign companies have agreed to these restrictions because of the large size of the Chinese market.

I’m Christopher Jones-Cruise.

Correspondent Saibal Dasgupta reported this story from Beijing. Christopher Jones-Cruise adapted the report for Learning English. Kelly Jean Kelly was the editor.

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Words in This Story

cloud – n. the large computers (called servers) that you can connect to on the Internet and use for storing data

hack – v. to secretly get access to the files on a computer or network in order to get information, cause damage, etc.

intellectual property – n. something (such as an idea, invention, or process) that comes from a person's mind

critical – adj. extremely important

dominant – adj. more important, powerful, or successful than most or all others

abroad – adj. in or to a foreign country

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