VMware taps China's 5-year economic plan

The virtualization giant leverages the Chinese government's agenda to push cloud computing for local companies, and is banking on success in sharing its technology with them.
Written by Ryan Huang, Contributor on

SAN FRANCISCO--China's economic plans to develop the IT capabilities of its domestic companies and become a leader in cloud computing have provided VMware massive opportunities to grow.

In an interview with ZDNet Asia here Tuesday at the vendor's VMworld conference, Andrew Dutton, general manager for Asia-Pacific and Japan at VMware, pointed out that the company has been able to ride on the growth opportunities generated by China's latest five-year economic plan.

He was referring to the country's 12th edition of its five-year economic blueprint which runs from 2011 to 2015. One of its focus areas is to make cloud computing a key driver for the IT industry and the development of e-government services.

Tailoring approach for China
There has also been a push for local companies to leverage foreign technology to grow, and this is an opportunity VMware has seized, said Dutton. 

He added that VMware is running four different strategies for the Chinese market. This meant tailoring different approaches to segments comprising "big cloud" such as services for the government; large commercial entities such as telcos; big bureaus such as government agencies and the financial sector; and small and midsize businesses in tier two and tier three cities.

Dutton pointed out that VMware has different approaches in handling business in Taiwan and Hong Kong, where the vendor focuses on supply chain issues and financial sector offerings, respectively.

"We found that the best way to deal in China is to be 'as Chinese as possible', so we have no expatriates there. We have Chinese folks and we have Chinese labs," he said, adding that this was a shared policy across the company for other countries.

Building on partnerships
Zooming in on VMware's partnerships with Chinese companies, Dutton said this takes form in two fashions. One form of partnership allows local companies to embed VMware's technologies and use its application interfaces to build enhancements for the Chinese market.

He pointed out this was a win-win situation since local companies understood the market better, which would ultimately lead to faster time to market for the eventual VMware-based product. He added it currently has about 1,900 such technology partners, which is a 10 percent increase from a year ago.

The second form of partnership largely involves hardware equipment makers, or original equipment manufacturers.

"They are taking our stack and sending it already on the disks, as a normal part of the production of these servers. So when they ship, they go out with VMware," explained Dutton. He shared that there are now about four such partners including Inspur and Skycloud, with plans to double this over the next 12 months.

He expects to see massive demand for virtualization and cloud products in China due to the need to address the complexities brought about by massive scale of the market.
China last year spent US$286 million on its cloud computing infrastructure and this number is expected to hit US$1 billion by 2016, according to an IDC research in May.

The push for cloud computing in the country has been gaining momentum, most recently with the setup of the China Open Source Cloud League early this month. This technical community will work on the development and support of OpenStack open source cloud platform to increase China's contribution to the OpenStack global community.

Ryan Huang of ZDNet Asia reported from VMworld 2012 in San Francisco, United States. 

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