The Games The China Web Companies Play

What is going on in the China data center market is quite complicated.  I've had a variety of people talk to me about working on projects in China, and I have passed so far.  I used to go to Asia every 6 weeks, but those days are long gone.  But, I do talk to a lot of people who go, so I can still get information on what is going on.

China has successfully driven out Google, eBay, Facebook, Twitter, and many other big web brands.  This leaves the Chinese companies to reach the China market.  The reasons for this could be a long, long post in itself.  Let's treat it as a fact that China wants Chinese companies to build its web.

Now for years, the provinces and many other groups have attempted to be entrepreneurial in building their own web services in data centers scattered around China. In the same way that there are empty ghost cities in China. 

Ordos: The biggest ghost town in China

Empty apartment blocks, Ordos, Inner Mongolia

In Inner Mongolia a new city stands largely empty. This city, Ordos, suggests that the great Chinese building boom, which did so much to fuel the country's astonishing economic growth, is over. Is a bubble about to burst?

There are ghost data centers in China.  Many are in these ghost cities, but also scattered around.  Can you imagine if the US Federal government decided where data centers should be built?  The data centers would be built where polticians would benefit most.  

Given the censorship requirements of the China Web, the costs are increasing substantially decreasing profits.  The WSJ reports on this situation with Tencent, Sina, and others.

Similarly Sina said it would continue to invest heavily in its Weibo microblog, though a timeline for profitability remains unclear. Chief Executive Charles Chao said the company expects to earn revenue from the site by the second half of the year, but added it would take several quarters to judge advertiser interest in the platform, which has more than 300 million users.

Revenue increased 6% from a year earlier to $106.2 million, but operating expenses jumped 61% to $67.2 million. Sina attributed the rise primarily to personnel and infrastructure costs associated with Weibo.

The company didn't elaborate, but analysts also say the company is hiring censors to help it delete posts considered too sensitive for China's tightly controlled Internet. China has cracked down on Internet content ahead of a once-a-decade leadership transition that begins later this year—a process made even more sensitive by the recent ouster of a former Chinese Communist Party highflier, Bo Xilai.

 This is all part of the game played to build data centers in China.  One of the interesting parts is how data center infrastructure - land, power, water, and network access are being used to regulate who builds.  In the past data centers would be built if you had enough money.  Now even money won't get you past the 3 year approval cycle for a 10MW substation.  You need the approvals from the right agencies to get past this hurdle any quicker.

There are a handful of companies that can do this.  Do you know who they are?