Government Cloud Provider Inspur Cloud Gets CNY 600 million in Series B Round of Financing

Government cloud computing company Inspur Cloud completed series B round of financing upward of CNY 600 million (USD 87 million), pushing its valuation to USD 1.1 billion and becoming the first Internet unicorn in Shandong Province. 

Focusing on governemnt cloud, Inspur cloud is heavily invested by governments. China Development Bank invested CNY 20 billion (USD 3 billion) in Inspur Cloud in its first round of financing. Major investment institutions in series B round include China's Minister of Finance-managed investment institutions, and institutions backed by local governments, China Construction Bank, China Minsheng Bank and private-owned institutions.

Cloud computing market is booming as traditional IT services shifting into cloud computing. Analysys, a Chinese big data compay, estimated that China's cloud computing market is CNY 86.1 billion (USD 12.5 billion) in 2018, accounting for only 23% of the sum of Chinese IT, data and software services. In the future, more manpower expenditures would turn into IT spending. 

There are four types of players in the government cloud computing area, according to OpenSource Cloud Alliance for Industry (OSCAR)(云计算开源产业联盟) telecommunication companies including China Telecom and China Unicom; 2) IT providers including Inspur Cloud, Huawei Cloud and Sugon (曙光云); 3) Internet companies such as Alibaba Cloud, Tencent Cloud, JD Cloud, and DT Dream (数梦工场); and 4) system integrators such as Taiji Computer (太极计算机) and Digital China (神州数码). 

Telecom giants and traditional IT providers are leading this industry, expanding their businesses from Infrastructure-as-a-service (IaaS) to Platform-as-a-Service (PaaS) and Software-as-a-Service (SaaS). On the other hand, internet giants focus more on the applications, with good performance in launching PaaS and SaaS. 

As indicated by OSCAR, China's government computing market reached CNY 29.26 billion (USD 4.25 billion) in 2017, surpassing the number of industrial, financial and internet computing sectors. The predicted market scale is CNY 81.32 billion (USD 11.8 billion) in 2021. 

Government data isolation

Data isolation leads to low efficiency. This is a problem to be solved by the Chinese state and local governments. 

"Despite of the large amount, government data are imbalanced in geographical, interdepartmental, and data type aspects," said Kang Zhixi (康执玺), Product Director at 4Paradigm. 

Data governance between tier-one cities and other cities and that between east and west are all different. Data inequality between functional departments also remains. "Currently, traffic, public security, and regulatory departments have good data accumulation, but departments of environment, health and family planning, education and government affairs are weak in data management," Mr. Kang said. Furthermore, Chinese government has relatively rich image and video data but lack of data in other types.

Inspur Group currently holds four independent publicly listed companies, including Inspur Information (浪潮信息), Inspur Software (浪潮软件), Inspur International (浪潮国际) and Inspur Huaguang(华光光电). Inspur Cloud is actively seeking to be listed, according to Chairman of Inspur Group on Inspur World 2018 Conference.