Japanese companies to capture cloud and data center market share in Southeast Asia

By April 2, 2020Cloud, Data Center, News

Japanese companies to capture cloud and data center market share in Southeast Asia

Japanese companies to capture cloud and data center market share in Southeast Asia

Japan is placed at the most significant and largest data center services market in APAC. The country remains the world’s third largest national economy after the USA and China. Japan is highly urbanized with rich infrastructures and an Internet literacy rate of 93%.

Japan is the birthplace of many global powerhouses in the technology industry, including NTT, Sony, Fujitsu, and Mitsubishi. These successes accelerated the country to be equipped with one of the world’s most advanced telecommunications networks.  

Over the past few years, apart from the rising demand in the usage of cloud services, the market size and demand of domestic data centers are also growing at a fast pace. The size of the domestic data center market in 2022 is expected to reach ¥1,797.6 billion, with an annual growth rate of 8.6% from 2017 to 2022.

ASEAN seen as an attractive hub to expand your data center business

Following decades of domestic expansion, Japanese companies are now seeking to invest in the APAC region, and especially into ASEAN. In contrast to the slowing economy of Japan, Southeast Asia is progressing rapidly, which attracted Japanese corporations to expand to ASEAN. The annual growth rate of the datacenter market in ASEAN countries is estimated at 13% between 2019 and 2024.

In 2013, ITOCHU Techno-Solutions Corporation (CTC), a Japanese IT systems integration company, expanded their various IT businesses for data center in ASEAN, by acquiring ​CSC Automated Pte. Ltd. (Currently known as: CTC Global Pte. Ltd) in Singapore. Keita Koizumi, CTC’s Senior Business Development and Account Manager, anticipates standard office systems to witness a shift towards cloud services over the next five years due to competitive pricing and flexibility in operation.

Growth is also expected from many data centers and managed services for giant IT companies, such as Google, Facebook, Alibaba and Tencent. While Japanese IT services continue to emerge, the demand is unable to keep up with the growth. For Japanese companies to remain economically sustainable, they would need to expand their business and services outside of Japan towards countries where the economies are growing steadily. As ASEAN work towards the goal of achieving regional economic integration, it greatly boosted investment confidence, making ASEAN an attractive hub for IT services companies. 

In the past, Japanese trademark products were known to be the best and exports from Japan were very costly. But in recent years, businesses across ASEAN are moving forward rapidly and creating products mirrored to Japanese products due to technological advancements. These products are similar to that of Japanese products but could be at a fraction of the price. Mr. Koizumi suggested Japan needs to start working with ASEAN countries to lower their production cost and to gain an international foothold to compete globally. 

The challenges of expanding into ASEAN

Expansion into ASEAN comes with its difficulties. With diversified cultures across ASEAN, adaptability and manpower management poses a great challenge. Ask questions and immerse yourself in these cultures to understand these cultures and manage the people working for you in different regions.

Firms looking to expand into ASEAN should also be aware of the various building and data protection regulations in each country. Along with the globally recognised Uptime Institute and ISO 27001, there is also Singapore’s Threat and Vulnerability Risk Assessment (TVRA), Hong Kong’s Outline Zoning Plan and Philippines’ Data Privacy Act. If you wish to expand your datacenter or cloud services in any country, you should comply with all laws and regulations during build and operational phases.

To ensure a smooth transition into the ASEAN market, be aware of these challenges and make decisions with prudence when selecting a country in Southeast Asia to successfully expand into.

Connect with the right people and get advice before you expand into ASEAN

At W.Media, we have a strong presence in the ASEAN cloud and datacenter industry. Bridge the gap to building relationships with these firms in ASEAN by connecting with us today. We can help you leverage on our extensive marketing offerings and networks. For more information and advice, email or call our friendly consultants on +65 8769 3412.

Author

Sumin Park

W.Media

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