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Alibaba points to Singapore in response to cloud security concerns

Security fears often pop up when dealing with China tech vendors, but Alibaba assures customers with its international headquarters in Singapore, where it says it abides by local laws governing data privacy.

China tech vendors inevitably face concerns about data and cloud security, especially in dealing with US customers, but Alibaba hopes to defuse potential doubt through its international headquarters in Singapore.

It also wants to remind customers that it is a US-listed company.

Speaking to ZDNet in an interview, Alibaba Group's vice president Yu Sicheng said: "First, China's international business is a Singapore business that is governed by a US-listed company. It follows Singapore laws in terms of data privacy as well as all commercial contracts involving those with our customers and partners.

"We just happened to be a US-listed company that is based in China," said Yu, who heads the vendor's cloud business outside of its domestic market. Currently based in Beijing, the executive is likely to move to the Singapore headquarters, which was announced earlier this year.

With relationships between China and the US particularly tensed over cyber hacking and spying allegations, tech vendors from the Chinese market often face customer concerns about data and cloud security.

With relationships between China and the US particularly tensed over cyber hacking and spying allegations, tech vendors from the Chinese market often face customer concerns about data and cloud security.

Alibaba's cloud business in the US remains nascent and is starting from a small footprint, Yu said, noting that it had yet to encounter any security-related queries specifically associated with its China roots.

He also pointed to the vendor's focus on boosting its own security capabilities, which including product development.

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Alibaba's Yu Sicheng

"Security concerns a wider concept [outside of Alibaba's China roots]. Most companies are concerned about how we can protect their data against external attacks," he said. He noted that Alibaba has a team of more than 100 security specialists who focus on product development for its Aliyun, or AliCloud, customers.

"Unlike other cloud vendors, we provide security products directly to our customers," Yu said, singling out the vendor's DDoS (distributed denial-of-service) defense tool, CloudShield, which last year successfully defended a customer in China against an attack that clocked at 453Gbps--the largest recorded then.

He added that its cloud customers were free to choose security products from third-party vendors if they still had concerns about Alibaba's security products.

Starting from cloud zero

What is proving challenging for the vendor is its lack of branding in the cloud market.

While its cloud business has operated for more than six years in China, where its customers include China Railway, Alibaba launched its international cloud business only at the start of 2015.

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"So far, it's been challenging everywhere... Up to three quarters ago, we had almost zero presence so it will take a while for the market to recognize our branding in cloud," Yu said, adding that his team would be looking to run marketing and campaigning activities to raise awareness.

He also stressed the need to build local partner relationships, including ISVs (independent software vendors) and resellers, in the markets it operated. "Our ecosystem is very important. It's one of the key company values within Alibaba," he explained. "We're an e-commerce company but we don't own any inventory, similar to the likes of Airbnb and Uber. We started from building an ecosystem. It's the same for AliCloud. We don't want to do this by ourselves so building an ecosystem is the key approach."

He added the vendor was currently in discussions with several major service providers in the region, but declined to reveal further details, noting only that partner-related announcements would be released soon.

Alibaba also is developing a cloud portal to support its business outside of China, and designed specifically to the English-speaking community. It will cater to site navigation habits of the western community as well as Singapore's regulations, billing, and accounting rules. All of the company's international cloud business are billed and invoiced to its Singapore office.

Alibaba currently operates data centers in five regions within China including Beijing and Hangzhou, as well as one each in Singapore, Hong Kong, and Silicon Valley. It is looking to build a second data center in Singapore, likely in the next quarter, and in the eastern part of US. New data centers also are scheduled to open in Dubai and Frankfurt, with further such facilities in other parts of Europe, Japan, and the Middle East and South Africa.

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"We're hoping to cover as much as the global IT market as possible," Yu said, noting that new locations for its data centers would depend on market and customer demand.

AliCloud currently employs more than 1,200 worldwide, of whom 80 percent are engineers, and has more than 1.8 million customers that it supports either directly or through service providers.

In its recent second-quarter earnings, the cloud and internet infrastructure business grew 128 percent year-on-year to clock US$102 million in revenue. Despite being one of the fastest-growing units in the organization, this segment only accounted for 3 percent of Alibaba's overall revenue.

The company in July announced it was investing US$1 billion to drive growth in its cloud business and, the following month, it launched a big data cloud platform--dubbed DT PAI--to enable developers to analyze large volumes of data.

Aliyun President Simon Hu said in a Reuters report that the company, with its cloud technology now accumulated sufficient technology maturity, was targeting to surpass Amazon Web Services (AWS) in four years.

Asked about this ambition, Yu laughed: "I can't say if it'll take three or four or five years, but if you look at our unit's growth, we're definitely growing at a faster rate than AWS."

He added that Alibaba would continue to focus on technology innovation and pointed to the recent Sort Benchmark competition, in which the Chinese vendor's distributed computation platform, FuxiSort, outpaced others in its category in the GraySort and MinuteSort benchmarks.

"Our global expansion also will be key to our cloud growth," Yu said. "Yes, the majority of our revenue still comes from China, but if we can replicate this success in other countries, hopefully, we can increase our contribution to the company's overall revenue."