Companies vie to get chinese consumers on cloud

It is time to forget about the USB flash disk.

Wu Dan, a government employee in Jiangsu province, had been using a USB drive for many years to transfer files and documents between computers. Now she has found something more convenient called cloud storage.

She can store the files on the cloud and access them from anywhere, share them with friends, and synchronize the contents to her other computers and mobile devices.

"It is really convenient for my lifestyle," says Wu, 26.

Wu is among millions of Chinese users beginning to enjoy the advances of cloud computing.

According to the Internet industry research agency iResearch, the number of consumers using cloud services is expected to increase to more than 223 million, or 36.7 percent of Chinese Internet users, by the end of 2013.

"Now, with the fast development of mobile Internet, people have mobile phones, tablets and laptops rather than just a desktop computer," says Yan Huawen, an analyst with iResearch. "It is very difficult to manage data efficiently. A consumer cloud service is a very good solution."

Such a vast user base, of course, has huge business potential. With more than 513 million Web users in China, international and domestic companies are all trying to expand their business with cloud computing.

MKnote, the cloud note-taking product from Shanda Innovations, announced on Aug 15 that it is to cooperate with UCWeb Inc, a leading mobile Internet browser provider. The result will enable users of the latest version of UC's browser to save information to MKnote in one click. Then the information can be synchronized to the user's mobile devices and computers.

"For one consumer, he or she only needs one personal cloud platform - which means everybody wants one platform to store all their private information, instead of different products to store different information," says Yan Fei, director with MKnote program. "Based on this demand, we launched our open platform in May to provide a storage and synchronization service to other apps."

Evernote, the leading player for cloud note-taking around the world, also attaches great importance to the demands of its Chinese users. China is its third-largest market (about 1.1 million users) after the US and Japan.

Under its Chinese name Yinxiang Biji, and in cooperation with UCWeb, Evernote has its own servers in China, covers two leading operating systems, iOS and Android, and offers a local payment solution.

Last month Evernote announced a deal with Alipay, the counterpart of PayPal in China, making it easier for Chinese users to pay. Alipay is operated by e-commerce giant Alibaba Group, and according to its official blog, more than 10 million online deals are done through it daily.

At the end of June Evernote had more than 34 million users, of which 1.4 million pay for a premium service. Evernote's revenue in China for 2011 was about $18 million (14 million euros).

Other international companies are biding their time for expansion in China.

California-based SugarSync Inc, an online storage company that competes with file hosting service provider Dropbox, launched a Chinese version in 2009, but it is still developing its market in China. A small team is involved in the development of mobile client software, Web applications, localization and quality assurance testing.

Nearly 55 percent of SugarSync's users are in the US, but its international business is growing rapidly, and is expected to be the greater share by the end of this year.

"We don't have a Chinese office like Evernote," says Robb Henshaw, the company's director of corporate communications. "However, we are open to more local solutions, such as integrated local PayPal for payment, if that was identified by potential users or partners as something that was needed to increase signups."

SugarSync's cooperation with Samsung and Lenovo will also help it penetrate the Chinese market. Its product will be pre-installed into all Samsung mobile devices and Lenovo laptops and tablets and Henshaw believes this will help more users learn about cloud storage.

Yan Xiaojia, of Analysys International, a research company in Beijing, says cloud computing is a way for more foreign companies to increase their presence in the Chinese market.

"Evernote is famous for its note-taking product, but it is now building a cloud service platform," Yan says.

"The huge user base of more than 500 million Web users is the most attractive part."

Yan Huawen of iResearch adds: "Chinese companies have warmed up the market with their products, and many Chinese users are already familiar with cloud storage, and now they are looking for premium-user experience."

However, international companies may face several problems before they can profit from this huge market.

Yan from Analysys says Chinese companies may be unable to compete yet with companies such as Evernote in terms of feature innovation, but they are catching up and offering cheaper choices. For example, Evernote offers only 60 MB of free storage a month, whereas Mknote's offer starts at 500 MB.

"At the same time, Chinese Internet giants such as Baidu (search engine) are also paying great attention to the cloud market, which will also prove a challenge for international companies," Yan says. "They have a huge user base, wider brand recognition and a better understanding of the Chinese market."

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