Alibaba Cloud rides the east wind of Chinese enterprises' overseas expansion

Author | Chai Xuchen

Editor | Liu Baodan

"Let there be no difficult business in the world," Alibaba has turned its attention to Chinese enterprises under the tide of going global.

"Born global has become a replicable method for most Chinese companies." On June 24, at the Alibaba Cloud Chinese Enterprises Going Global Summit, Liu Weiguang, Senior Vice President of Alibaba Cloud Intelligent Group and President of the Public Cloud Division, stated that Alibaba Cloud will accelerate the creation of a global cloud computing network, deploying full-stack AI capabilities at every global node to serve enterprises that are born global.

Alibaba Group CEO and Alibaba Cloud Chairman and CEO Eddie Wu stated that 26 years ago, Alibaba's first business, alibaba.com, was to help Chinese enterprises go global, selling Chinese goods overseas and facilitating trade around the world.

Eddie Wu asserted that going global is an inevitable development for Chinese enterprises. Behind this is the emergence of new characteristics of Chinese enterprises going global after more than 20 years of transformation in China.

In Liu Weiguang's view, the industry of Chinese enterprises going global is becoming increasingly high-end, shifting from manufacturing to intelligent manufacturing; secondly, the regions for going global are becoming more diverse, expanding from Europe and the United States to the entire globe; finally, the operations of going global are becoming more localized and networked. The early stage of simply going out has transformed into being born global, meaning that R&D, production, supply chain, and sales services are all part of a global network collaboration.

Eddie Wu also emphasized that Chinese enterprises going global are no longer limited to exporting goods but are also taking technology, brands, and high-end manufacturing to the global stage.

In his view, products and technologies that succeed in the Chinese market will also play important roles in the global market. China has already achieved technological leadership in fields such as 5G, AI, and smart vehicles. The technological, supply chain, service, and brand capabilities of Chinese enterprises have formed an outward spillover effect. In the future, Chinese enterprises will have a greater influence in the global market.

In recent years, new energy vehicles have become a new main force in going global. GAC, XPeng, Changan, Leapmotor, and even Li Auto, which previously had a vague attitude towards overseas expansion, are now digging into overseas markets. However, the problem is that the "road" for Chinese enterprises to go global is not easy to navigate alone.

Wang Qijun, Senior Architect of the Digitalization Department of GAC Group, told Wall Street Insight that building a computing power cluster overseas carries significant risks, "It’s possible that our team buys a bunch of machines and cards back, and they can't be put into production for a year."

Wang Qijun bluntly stated, "With expenses of hundreds of millions per thousand cards, building this ten-thousand-card cluster could take tens of billions, and we might not even know when it will be approved. With a vague attitude towards overseas expansion, who will this ten-thousand-card cluster go to?"

However, for them, to support the rapidly expanding overseas market, how to achieve the global rapid deployment of key business systems is crucial. Meanwhile, Alibaba has accumulated global experience and capabilities for its own e-commerce, Cainiao, and Ant Group, and it is now time to export and monetize these capabilities.

Internally, Alibaba Cloud revealed that it will maintain a unified technical architecture and service platform for domestic and overseas infrastructure, providing a comprehensive solution for Chinese enterprises to expand their global business Eddie Wu stated that in the next three years, Alibaba will invest over 380 billion yuan in building cloud and AI hardware infrastructure, which exceeds the total amount of the past decade. According to the plan, Alibaba Cloud will accelerate the creation of a global cloud computing network covering China, Japan, South Korea, Southeast Asia, the Middle East, Europe, and the Americas, a cloud computing network with the best AI technology service capabilities and global competitiveness.

In addition to infrastructure, Alibaba Cloud will also promote the internationalization of models and accelerate the globalization of AI products. It is understood that Alibaba Tongyi has currently open-sourced over 200 models, with more than 100,000 derivative models, making it the largest open-source model group in the world.

Furthermore, Alibaba Cloud will provide solutions with better ROI. In May 2014, Alibaba Cloud's Hong Kong data center was put into operation, marking Alibaba Cloud's official entry into the international cloud computing market. To date, Alibaba Cloud has served 250,000 Chinese enterprises going overseas, covering various industries.

As a result, GAC Group adopted Alibaba Cloud's planned "regional center + national station" hybrid architecture to solve compliance issues, and the overseas vehicle networking system has been completed on Alibaba Cloud. "Building our own IDC is very costly; if we had that time, the cloud would have already been running well. We focus our energy on our main business and leave cloud services to professional teams," Wang Qijun told Wall Street Insight.

As the domestic cloud industry enters a deep competitive phase, Alibaba Cloud's combination of multiple strategic trump cards of AI + public cloud + going overseas may change the direction of this track in the future.

Below is the transcript of the dialogue between Wall Street Insight and Wang Qijun, Senior Architect of GAC Group's Digitalization Department, Xie Xuzhang, Co-founder of Aishi Technology, and Han Hongyuan, Vice President of Alibaba Cloud Intelligence and Chief Architect of the Public Cloud Division:

Q: The overseas expansion of Chinese enterprises with Alibaba Cloud is actually an overflow of China's manufacturing and innovation capabilities. How is this different from when we opened up back then?

Han Hongyuan: There are some differences compared to the early days of reform and opening up. From the perspective of cloud computing technology capabilities, many projects are developed in conjunction with the global open-source community, better hosted on the cloud. Today, there is not such a significant technological gap; it is not about outputting from a high water level to a low water level, but rather leveraging comprehensive advantages.

Today, we are more focused on AI in the civilian sector, and everyone is competing in an open environment. Alibaba Cloud has made significant investments to better serve the digital life sector, providing better solutions to the problems encountered during the overseas expansion process.

Because Alibaba Cloud's global layout was relatively early, it had already made very good globalization plans before the wave of Chinese enterprises going overseas arose. Of course, this includes our own business needs and considerations of the trend of global development. Under the globalization layout, today we utilize global cloud computing network capabilities to support the IT needs that Chinese enterprises may have overseas.

Wang Qijun: Taking the automotive sector as an example, we have become a global enterprise through going overseas, which is different from the global enterprises that came in during the reform and opening up. They were already global giants before they entered.

Q: GAC mentioned that it would build its own IDC for overseas expansion, but it may find that it still needs to go to the cloud during the process. Is this a common challenge that Chinese enterprises encounter when going overseas? **

Wang Qijun: The situation now is completely different from ten years ago when going overseas; back then, we were forced to build this capability ourselves. We are fortunate that today Alibaba Cloud's capabilities are measured in terms of cost, efficiency, and various other aspects. Especially in terms of security and compliance, Alibaba Cloud has faced many challenges globally, and its ability to operate smoothly speaks volumes about its foundation.

This foundation is not something our enterprises should spend too much time and energy building. For example, when we were kids, if there was a power outage, a diesel generator would supply us with power, but now we rely on the power grid. GAC cannot build its own power plant; this is an evolutionary process, and the use of IDC must involve the cloud.

In Alibaba's core e-commerce business during Double 11, why not utilize the extremely high public cloud capabilities developed for those super demanding scenarios? The trend of infrastructure moving upwards is becoming more evident, and the complexity is increasing. For layers like MaaS, enterprises have even less capability to build such complex scenarios themselves. Therefore, I believe that effectively utilizing public cloud capabilities is a very important strategy.

Han Hongyuan: We have discussed the issue of self-building versus moving to the cloud many times before. In addition to providing infrastructure resources, cloud computing also offers significant technical capabilities, and these two aspects need to be balanced.

For example, software must be widely used and thoroughly tested before it can run reliably and effectively. Today, when a startup wants to use high-level IT capabilities, the cloud is the most direct choice. You no longer have to consider issues of reliability and availability.

For instance, when you activate multi-agent services on demand, even at a small scale, you can use these protected resources. In the past, offline, enterprises had to build several data centers to afford this. Today, the threshold for using many advanced technologies has been significantly lowered, which is the advantage of the cloud.

On the other hand, compliance is crucial. Today, we have the foundational support for compliance in our overseas technical capabilities. If you self-build everything from scratch, it adds a lot of complexity. Therefore, the cloud provides the best support for everyone to explore new markets.

Question: When did the demand for Chinese enterprises going overseas show significant growth, and in which sectors is it concentrated?

Han Hongyuan: Alibaba Cloud only truly began to treat going overseas as an independent endeavor last year. At that time, we increased our focus on this area, hoping for more opportunities to collaborate with everyone to support their overseas business development. From an industry perspective, typical sectors like gaming, consumer electronics, manufacturing, and automotive are all expanding outward.

However, we definitely need coverage in key areas for our clients, with consumer markets being the stronger consumer markets in Europe and America. Gradually, we are also expanding into regions like Africa and South America.

Especially in the automotive industry, there are high requirements for network coverage because customer usage can experience delays and various impacts. Therefore, our construction may be progressing faster than what you see today in the main sites, with coverage gradually improving from Southeast Asia to the Middle East, South America, and even Europe and the United States Wang Qijun: The driving factors for public cloud going overseas have changed. Earlier, Alibaba built its capabilities based on its own e-commerce, Cainiao, Ant Group, and these global capabilities were actually the result of its own e-commerce system fostering its basic public cloud service capabilities. Today, the trend of Chinese companies going overseas has formed, and the demands of some of our clients will become a driving force for their capability building. This is one change I have observed.

Xie Xuzhang: Because we are in the AI model and application sector, we had to go overseas from day one, as all the best models and application companies are globalized. Moreover, we found that domestic cloud vendors can provide solutions, including computing power solutions, that are significantly better than those from overseas suppliers. For startups, this is a great help in terms of service and technical reserves.

Question: What has been the experience of building the GAC WanKa cluster? And what are your thoughts on the overseas deployment of intelligent product capabilities and the corresponding construction of overseas IT infrastructure?

Wang Qijun: The WanKa cluster is a special capability requirement driven by overall business needs. In our discussions, we found that it’s not just about the cards; can high-performance storage, high-performance networks, and parallel requirements keep up? During this process, we realized that building it ourselves would be very difficult. I need a very high-level IDC to assist with my overall operations.

It’s possible that my team buys a bunch of machines and cards back, and it could take a year to sort it out. If the cost is hundreds of millions per thousand cards, building this WanKa cluster could take tens of billions, and I might not even know when it will be ready. Once invested, there’s also risk; what if my resources are depleted in the middle? Who would take these ten thousand cards?

Therefore, we must co-build with public cloud. Moreover, we can just use what they have explored before.

Question: There are three major challenges in going overseas: cost, compliance, and intelligent product capabilities. What are your thoughts on intelligent product capabilities?

Wang Qijun: It’s easy to deploy the cockpit, but when it comes to the information of the Internet of Vehicles, although we have already set up overseas IoV services, we cannot take that data back for training. The situation we face with overseas car companies in China is the same; Tesla's FSD doesn’t run well here, and it won’t run well when we go overseas either. So I need to train with local data, and when will that channel open? When will the policies be okay? When can I take the model out to use its data? It depends on this.

My training runs on Alibaba Cloud, and in the future, my IoV data will also be there. It will be easy to move it out; the entire system remains the same, and the whole tech stack is the same. I think this is convenient.

Question: What businesses of GAC have already gone to the cloud, and which businesses do you think are not suitable for the cloud, such as warehouse management systems, supplier relationship management systems, overseas apps, after-sales and IoV, and enterprise office systems?

Wang Qijun: I don’t have overseas infrastructure; I don’t have a single data center overseas, only my factory in Thailand. Because those manufacturing systems are heavily connected to the production line, we built a small IDC to run these systems locally, while everything else is in the cloud. Moreover, if you are not in the cloud, it’s non-compliant. You can only have the app locally, and all its data must be generated locally, and you don’t touch it; that’s the only way to be compliant Question: Can't we also build our own IDC to host it locally?

Wang Qijun: Building our own IDC is very costly, and it's impossible. If we had that time, the cloud would have already been up and running. The difficulty of organizing such a process grows exponentially; this is no joke. It's like needing electricity to make money in your business; if your business can use the cloud, then you can make money. You should focus your energy on your core business and leave the cloud matters to the professionals.

Han Hongyuan: Today, the cloud can still bring a lot of valuable considerations. Newer enterprises are more inclined to directly develop their businesses on the cloud. At the same time, the technical capabilities available on the cloud today were sometimes overlooked in the past; providing resources and providing technical capabilities are equally important