Pacnet, a leading provider of managed data connectivity solutions in the Asia-Pacific region, plans to add two more data centers in China within three years as it seeks to ride the growing demand for information networks and bandwidth capacity in the world’s fastest growing major economy.
“We are looking to invest in one or two more facilities in China in the next two to three years in areas like Shanghai and Shenzhen,” Jim Fagan, Pacnet’s president for managed services business told EJ Insight.
“Shanghai free trade zone is absolutely an option for us, but we haven’t made decision on that in particular yet,” he said in an interview.
Pacnet, which operates a submarine cable network, currently has six data centers in China — in Beijing, Chengdu, Shanghai, Shenzhen, Xi’an and Chongqing — while a new facility in Tianjin will start operation by the first quarter of 2014.
Apart from China, the company — which arose from the operational merger of Asia Netcom and Pacific Internet — has its footprint spread across several other emerging economies as well as developed markets in the region. Asia Netcom had once been a wholly-owned unit of the former China Netcom Group Corp. Ltd.
“We would like to build a network hub in China by adding data centers in Beijing or nearby Tianjin, Chongqing for the western China, and Shanghai and Shenzhen,” Fagan said. “We would like to fill out the diagram in the country.”
“And the free trade zone in Shanghai is quite an interesting option for us as we can tie in the network in China with that in the free trade zone,” the executive said, without giving further details.
Looking ahead, Pacnet expects to benefit from the “going-out” strategy of Chinese firms, as they seek more international business.
“When Chinese companies continue to go out and do multinational business, our data centers located in the pan-Asia region will help,” Fagan said, adding that “it would be the same when foreign companies want to get into China”.
He pointed out that many Chinese companies are seeking manufacturing businesses in Malaysia and mining operations in Australia.
Pacnet has offices in developed markets such as Hong Kong, Singapore, Japan, South Korea and Taiwan as well in emerging economies such as India, Indonesia, Malaysia and Thailand. It also provides services for the United States.
“We can provide strong support in developed countries while helping companies reduce risks in emerging markets. We have people actually staying in places like Thailand and India,” Fagan said.
The company has won internet data center licenses from China’s Ministry of Industry and Information Technology, enabling it to offer interconnected data center network services to its clients. Rivals that do not have such licenses will have to partner with local firms and own a minority stake.
Pacnet is the first foreign invested company to have been issued a license to provide data center network services. The process requires an evaluation of four major systems maintained by license applicants, namely internet content provision record-keeping management; resource management; information security management; and data center operation security management.
For the cloud industry development in China, Fagan expects to see double-digit growth in the sector for the coming five years.
“The real growth should be seen in value-added services such as the content. One of the biggest things we see right now is a lot of Chinese content companies like broadcasters and others… they are trying to get that content out of China,” said Jon Vestal, vice president of product architecture at Pacnet.
“And we are seeing tremendous growth in the business. We do have CDN (content delivery network) business, so we are actively working on this sector,” Vestal said, without elaborating.
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