Alibaba's cloud computing arm has picked Singapore as the site for its new data center, as well as the headquarters of its overseas business, in a move to bolster the Chinese e-commerce giant's international expansion.
Speaking to CNBC ahead of the official launch on Wednesday, Ethan Yu, vice president of Aliyun, Alibaba's cloud computing business, described the new facility in Singapore as a "strategic" center that could give the cloud division an edge in face of stiff competition from U.S. cloud giants such as Amazon Web Services (AWS) and Microsoft.
"I think we are still on a learning curve in terms of [understanding] customer needs in different markets. Singapore's [data center] is the most strategic and hopefully, will become the biggest we have outside China. This will definitely play a role [in helping] Aliyun to catch up with the top players," he told CNBC by phone.
Earlier in July, Aliyun's president Simon Hu told Reuters that the cloud division now had the technological maturity to challenge more established players, after focusing on the Chinese market in its first six years. Hu added that Aliyun's goal was to "overtake Amazon in four years, whether that was in terms of customers, technology, or worldwide scale," reported the newswire.
When asked how pivotal a role the Singapore headquarters would play in Aliyun achieving that goal, Yu said: "I would not comment about how long we will take to catch up, but we will definitely take sooner than three or four years to learn the needs of our customers and create value for them."
While the cloud currently accounts for a very small part of Alibaba's overall business, the unit has expanded from its humble beginnings as the internet behemoth's in-house technical infrastructure into a fast-growing business that leases processing and storage space to small-and-medium internet businesses in China.
In the second quarter of 2015, Aliyun registered 106 percent year-on-year growth in revenue, generating $78 million in revenue for the New York-listed Chinese e-commerce behemoth.
While holding a 23 percent market share in its home market, Alibaba has set its sights on the cloud computing space beyond China, eager to tap into a market that according to researcher IDC could grow into a $100 billion industry by 2017.
In March, Alibaba opened a data center in Silicon Valley — its first on a hotly-contested U.S. turf. Three months later, it struck a series of global partnerships with the likes of U.S. company Equinix and Singapore telecoms giant Singtel, allowing it to use existing data centers built by its partners to push its own services.
The Hangzhou-based company also announced a $1 billion investment into Aliyun last month, which will help fund the Singapore data center - the company's seventh. Aliyun has existing data centers in the Chinese cities of Hangzhou, Qingdao, Beijing, Shenzhen and Hong Kong.
The new Singapore facility, scheduled to open in September, aims to cater to the cloud computing needs of businesses, in particular mainland firms, investing in Southeast Asia, Aliyun said in a press statement.