Why did Apple choose Guizhou to build its First China-based Data Center in China?
Source: Reuters | 2017-07-14 11:14:57

The largest global tech company is tied to an a far-flung province in the southwest of China by an agreement.

In the morning of July 12th 12th July, Apple Inc. and the people’s government of Guizhou province jointly held a news conference and signed the iCloud Strategic Cooperation Framework Agreement. Apple announce announced its decision on setting up a data center in Guizhou which will be run by the Guizhou-Cloud Big Data Industry Co., Ltd ("GCBD") with the technical support from Apple Inc. Apple and GCBD will cooperate to build up the "Main Data Center for iCloud" in Gui'an New Area.

Apple will invest USD 1 1 USD billion to set up the data center which would be expected to improve the user experience of iCloud in China. Apple committed to power its first China-based data center with 100% clean energy, like its other data centers worldwide, such as those in Nevada, USA and in Denmark in of Europe. It also emphasized in a statement, "Apple has strong data privacy and security protections in place and no backdoors will be created into any of our systems."

If you are an iPhone user, maybe you want to know more about the effect that the first China-based data center of Apple would bring.

What does this mean to iPhone user?

If you search "Apple iCloud" in Google, the top message is "Apple apologizes to users for mistakenly saying their paid iCloud subscription was canceled". It seems a little exaggerated, while it's it is an epitome of iCloud service. In recent years, errors frequently occurred in the iCloud which often experienced outages and was hit by man-in-the-middle (MITM) attack.

Comparing to Google, Microsoft and Amazon, Apple mainly provides cloud storage and backup services for iOS users to store their pictures and videos, but services do not have any competitive edge. On the official iCloud Support page, there are a lot of posts put up by iPhone users such as "iCloud storage details are currently unavailable.", "iPhone backup failed each time iCloud sent the backup notification", to seek online assistance.

"Our Chinese users enjoy using iCloud to safely store their pictures, videos, documents and apps on iCloud and synchronize them with other Apple devices. We're We are committed to continuously improve the user experiences. The addition of this data center will allow us to improve the speed and reliability of our products and services."

In an official statement, Apple first mentioned the improvement of iCloud user experience. The speed and reliability of service will be increased through the locally based data center. Previously, Apple users in China suffered from slowness and sometimes broken connections to their data backup in iCloud, because the data centers based overseas (mainly in America) are used to provide service for iCloud users in China. After the establishment of the data center in Guizhou, iPhone, iPad and Mac users will have more stable access to data service.

Hydropower station under construction in Beipan River basin of Guizhou

Why did Apple choose Guizhou?

Decentralization is one feature of Internet products and services. However, the first-tier cities, Beijing, Shanghai, Guangzhou, Shenzhen, still lead the development of Internet industry which then ripples to far-flung regions. The underdeveloped far-flung regions are always the last to be benefited, and sometimes even ignored.

Guizhou province is this kind of region. Although its GDP exceeded trillion RMB in 2015 with over double-digit growth rate for 13 consecutive years, Guizhou still ranks the 25th among the 31 provinces of China.

However, this does not mean this area can't cannot develop Internet and IT industry. With reference to the data center location of the global tech giants like Amazon, Google and Microsoft, you will find that the large-size data centers are usually set up in the underdeveloped areas.

Consider Phoenix in America. It was just a desert town 20 years ago. At present, there are over 80 cloud computing data centers here, including Apple's. Phoenix has become the sixth largest city in the US and is now known as "Silicon Desert". Zhongwei, Ningxia province of China—the location of the tenth global data center of Amazon Web Services (WAS)—shares the characters of landscape and climate of Phoenix. Its abundant resources for generating wind and photovoltaic power, and 8.8 degree Celsius of the annual average temperature are conductive to the operation of data center. Alibaba and Qihoo 360 also set up their own data centers here.

Likewise Guizhou also has favorable climate, environment and energy supply;

Annual average temperature is 15 Celsius degrees, easy for the cooling of server rooms

Construction cost of large-scale data center is low for its vast land with sparse population and great geological stability;

Installed hydropower generating capacity of Guizhou ranks the fourth (2015) in China which could supply sufficient clean energy.

With the support of Guizhou government, in the past years, Guizhou, through the International Big Data Expo (Guiyang) ("Big Data Expo"), has attracted three major telecommunication operators to set up data centers in Gui'an New Area, a state-level New Area, with the total investment up to RMB 15 RMB billion. Foxconn, a partner of Apple and an OEM giant, also set up a green tunnel data center here which hosts 6000 servers.

The establishment of data center in the less developed area can be regarded as the only way to tie them to high technology. This theory resembles the model of Amazon, "Store in the Front (Beijing), Factory in the Back (Zhongwei)". The data is stored in the far-flung regions, calculated and developed in the southeast coast and used nationwide. The number of high-end talents in Guizhou and Ningxia is not enough comparing to the first-tier cities, but there are enough talents for IT infrastructure. The establishment, operation and maintenance of the data center also create job opportunities for the local people.

And GDP increases thereby. Guizhou has sufficient reason to develop big data industry.

Besides, Apple is not the only owner of the data stored in China.

The establishment of data center in Guizhou also complies with new cyber security laws. "These regulations require cloud services to be operated by Chinese companies so we're we are partnering with GCBD to offer iCloud. It is clear to our users that Apple has strong data privacy and security protections in place and no backdoors will be created into any of our systems."

A few words not only show the political factors behind the establishment of China-based data center, but also to disperse worries of users over data security and privacy.

According to the Cyber Security Law of China issued on June 1 1 June, 2017, the data of Chinese citizens or local data which widely defined to be associated with national security issues must be stored in the servers in China and the cloud service must be operated by local enterprises. That is the one of reasons why Apple chooses to partner with "GCBD". Therefore, Apple pursues a double brand strategy, using both the brands of "iCloud" and "GCBD" to provide services in China.

This is the biggest difference in the establishment of data center by Apple from that in America. For example, the locally based data center in Denmark is directly owned by Apple, and can be used to store data of European users, including Denmark. However, the data center built in Guizhou can be only used to store the data of Apple users in China and is operated in partnership with GCBD, a state-owned company of China. In certain circumstances, only GCBD can have access to the data, while Apple does not even have a say.

It is due to the special national conditions of China and its regulation requirements.

On a whole, if Guizhou is a model for industry upgrading in the middle-west of China, the establishment of data center by Apple in Guizhou will also become an example for multinational companies to invest in this area.

Although the performance of Chinese market is not prominent as shown in the financial statements of Apple for the recent period, the significance of Chinese market for Apple is undeniable. As we can see, as the largest tech company, Apple has been trying to develop businesses in addition to sales of production and basic services. It has announced its plan of establishment of R&D centers in Beijing, Shenzhen, Shanghai and Suzhou.

As for Apple, China means more than an important market. Therefore, the plan in China is a must do for Apple.

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