SAN FRANCISCO — China’s largest Internet company, Alibaba, is adding to its modest presence in Silicon Valley, but not in the way many expected.
In an announcement on Wednesday, Alibaba said it planned to open a data center in Silicon Valley, its first outside China. Instead of supporting the company’s hugely popular e-commerce sites, the center will help Alibaba spread a less prominent but growing side of its business: cloud services for businesses.
Alibaba has been wooing clients in China to use its services, which are similar to those offered by Amazon that lease computing power to businesses. Many vendors who sell on Alibaba’s e-commerce sites use the services, but the company has been slowly adding larger clients.
The company said the new data center would first cater to Chinese businesses operating in China but, in the second half of the year, do more to aim at foreign clients. The company did not specify when the center would open, how much it was investing in it or how large it would be.
Using the name Aliyun to refer to the company’s cloud operations, Ethan Sicheng Yu, a vice president, said, “Aliyun hopes to meet the needs of Chinese enterprises in the United States, and the ultimate objective of Aliyun is to bring cost-efficient and cutting-edge cloud computing services to benefit more clients outside China to boost their business development.”
Though Alibaba has a significant share of the market selling computing services to businesses in China, it is an open question whether the company can win over more foreign clients. Primarily a Chinese company, it will have to rely on English-speaking staff members to support and sell to the businesses, while also making its software easy to use in other languages.
Still, with a labor force mainly in China, the company may be able to compete on cost. It will also no doubt be helped by the growing number of Chinese companies that are seeking to invest and advertise in the United States.