China’s public cloud market to triple by 2025 as industrial sector drives new wave of expansion: McKinsey report

China’s industrial and manufacturing sectors will be able to drive a new wave of growth in the country’s cloud computing market, according to a recent report by global management consulting firm McKinsey & Co.

Analysts at McKinsey expect China’s public cloud market to triple in size in the next few years, from US$32 billion in 2021 to US$90 billion by 2025, as industrial and manufacturing companies shift their information technology (IT) workloads to the cloud, according to the consultancy’s latest report, which surveyed 278 decision makers in enterprise IT, digital and cloud from a wide range of sectors.

“Digital transformation is strongly correlated with cloud adoption. By 2025, 78 per cent of all IT workloads will be on the cloud in China”, said McKinsey partner Shen Kai in a media briefing to explain the report on Friday. In 2021, only 59 per cent of IT workload was distributed on the cloud, according to the report.

Cloud computing services enable companies to buy, sell, lease or distribute a range of software and other digital resources as an on-demand service over the internet, just like electricity from a power grid. These resources are managed inside data centres.

The industrial sector will lead the next wave of cloud migration in China, taking over from consumer-facing firms, with 32 per cent of its local IT workload expected to migrate to cloud by 2025, the highest among all sectors, according to the report. Ranked behind it are travel and logistics, retail and fast-moving consumer goods, and finance.

“For industry or manufacturing [companies], the role of these companies in China’s overall GDP is actually very large, but these are also very labour-intensive industries … their speed to migrate [IT workload] to the cloud is still quite slow,” said Shen. “The future development of the cloud can help these industries to improve their overall productivity.”