China on course to rival United States for internet speed

Shenzhen-based content delivery company buys Korean rival with multinational operations

PUBLISHED : Saturday, 25 February, 2017, 10:02pm
UPDATED : Saturday, 25 February, 2017, 11:13pm

China is on course to rival the United States in internet speed after the mainland’s largest content delivery network (CDN) company announced it was buying a South Korean rival with operations in dozens of countries.

Wangsu Science & Technology Co said this week that its Hong Kong unit had signed an agreement to acquire 97.82 per cent of CDNetworks from Japan’s KDDI Corporation for US$185.72 million.

A CDN is a collection of global servers that host websites and optimise internet speeds by allowing users to get data from the closest server rather than at the origin.

The move will give Wangsu a global presence and narrow its gap with the world’s largest CDN company, Akamai Technologies of the US, which generated a revenue of US$2.3 billion last year.

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The acquisition, Wangsu’s first since it listed in Shenzhen in 2012, will significantly boost the company’s ambition gain a greater international market share of the CDN business.

The company was founded on January 26, 2000 and has its headquarters in Shanghai.

CDNetworks, headquartered in Seoul, is a major player in the field with more than 10,000 servers and 180 nodes worldwide, covering 98 cities in 49 countries.

The company ranks first for market share in South Korea and third in Japan, and boasts many high-profile clients including Samsung, Hyundai, Ebay, Dell and Texaco.

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China’s CDN providers still occupy a very small portion of the global market despite their dominance at home.

According to a mainland report on the world’s 1,000 leading websites that use CDNs, Akamai holds 41 per cent of the total market share while Amazon CloudFront has about 12 per cent. Wangsu has only 3.4 per cent.

Only about 17 per cent of the market in China uses CDNs, far below the 50 per cent mark seen in many Western markets, according to a report by Dongxing Securities.

But the report said that given the skyrocketing demand in short video and video streaming, CDN would become increasingly popular in China.

Meanwhile, the Global Times tabloid reported this week that Wangsu may also acquire a 70 per cent stake of Russian CDN provider CDN-Video.

The report said Wangsu would offer about US$7.4 million for the Russian company.

CDN-Video operates about 400 servers worldwide, including in Russia, Germany, the Netherlands, United States, Malaysia and Singapore.