Hong Kong’s unique position as a gateway to Mainland China and the Asia-Pacific region means the city offers dynamic opportunities for companies servicing a growing demand for data, storage and connectivity.
Hong Kong is home to around 40 data centre providers and more than 50 data centres, making it the dominant internet hub in the region. Internet giants relying on data centres here include China Mobile, Microsoft, Alibaba and Tencent with the Tseung Kwan O area now hosting the largest data centre cluster in the Asia-Pacific region.
One of the top global operators in this sphere, Equinix, operates five International Business Exchange™ (IBX®) data centres in Hong Kong. It sees the city’s unique position and comprehensive IT infrastructure as a key selling point.
Samuel Lee, President of Equinix Asia-Pacific says Hong Kong government initiatives such as the Smart City Blueprint as well as its budgetary and policy support are all driving the city’s digital transformation and addressing the increasing demand for data storage.
Samuel Lee, Equinix Asia-Pacific
“Hong Kong was the perfect choice for Equinix to kick off our operations in the Asia-Pacific region, and continue to expand our footprint to serve customer needs. It’s one of the world’s freest economies, driven by its principles of free and open trade. As a leading financial hub, the city has a geographical advantage being in close proximity to the massive and prosperous Mainland China market, as well as having an established communication network to regional and global markets,” Lee says.
Rising demand
Benefits from the cloud service sector are huge. According to US IT hardware firm Cisco Systems, Asia’s mobile data is set to double that of North America and Western Europe combined by 2021. Driven by the region’s rapidly growing middle class, cloud traffic in Asia is likely to expand at a compound annual growth rate of 31%.
With such massive volumes of data, cloud storage is a convenient solution. Data centres are big business; business consultancy Frost & Sullivan predicts the market in the Asia-Pacific region will generate revenue of around US$31.95 billion by 2022. In addition, a study by market intelligence firm IDC reveals that digital transformation could contribute an estimated $9 billion to Hong Kong’s GDP by 2021.
Lee says the company’s recent Global Interconnection Index report reveals Hong Kong is expected to see the fastest interconnection bandwidth growth in the Asia-Pacific region, with a 55% compound annual growth rate, due to the city’s thriving and diverse business ecosystems, including financial services, cloud, IT and enterprises.
Such a buoyant outlook is reflected in the company’s growth. Last year it rolled out Equinix Cloud Exchange Fabric™ (ECX Fabric™) capabilities across Asia-Pacific that allows, for example, a Hong Kong-based company using its ECX Fabric™ to access cloud service providers in Australia. This year, Lee expects the company will expand ECX Fabric™ connectivity globally, meaning regional companies will be able to connect to companies in Europe and the US.
Case study in connectivity
Data centres like Equinix are opening doors for increasing connectivity and services with Mainland China and other regional markets. One example is the global financial portal Investing.com. By using Equinix IBX® in Hong Kong, Investing.com is able to ensure its audience in Mainland China gets fast and responsive access to dynamic content, interactive charts and investment tools, by shortening the distance between its applications, data, consumers and partners.
But setting up data centres is expensive and suitable land for purpose-built operations in Hong Kong is in short supply.
To succeed, Lee believes companies must be agile, innovative and customer centric. “Infrastructure plays a critical role in addressing the growing demand for better digital services. While companies can take advantage of Hong Kong’s sophisticated business infrastructure and advanced ICT development, they also need to ensure they have the infrastructure required to support the continuously evolving technological landscape,” Lee says.
Many operators have resorted to renting premises but space remains an issue that Hong Kong will need to address. Room to grow is a critical decider in where these centres will be located along the Digital Silk Road. As reported by CBRE research, more than two-thirds of new data centre supply over the next four years will be constructed in places like Mainland China and India, so Hong Kong will need to keep this challenge top of mind.
