Microsoft's Asia head sees 'huge' opportunity in China, the future in cloud computing

Companies hoping to adopt new technologies for long-term growth should embrace cloud computing, according to a top Microsoft executive.

Ralph Haupter, president of Asia at Microsoft, told CNBC on Monday that decision-makers in the region were looking for ways to digitally transform their businesses to tap into new technologies like artificial intelligence, the Internet of Things, mixed reality and wearable devices.

"Cloud is the how in 'how to do it,'" Haupter said.

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In a study released by Microsoft on Monday, 78 percent of Asia Pacific decision-makers surveyed said cloud computing was crucial in their digital transformation strategy.

The findings of the company's Asia Digital Transformation Study also showed 80 percent of the 1,494 respondents across the region saw the need for digital transformation as a long-term growth strategy but only 29 percent have thorough plans in place to do it.

The demand for public cloud services in Asia Pacific is expected to grow 17.7 percent in 2017 to $10 billion, according to research from Gartner. By 2020, total public cloud services spending in the region will rise to $15.8 billion.

Microsoft underwent its own business transformation from a desktop focus to more emphasis on cloud and mobile, and now has data centers in 13 regions across Asia Pacific to cater to the growing demand in public cloud services in local markets.

These centers support Microsoft's public cloud, Azure, which grew revenue by 93 percent on-year in 2016 and saw compute usage more than double.

To navigate the complexities of regulatory compliance and data privacy laws around the region, Microsoft also partners with other data center providers already established in local markets. In China, that partnership is done with U.S.-listed 21Vianet, with data centers running in Beijing and Shanghai.

"China obviously is a huge opportunity that's defined by size (and) acceleration of have, by definition, high demand and digitization," Haupter said, adding that many government initiatives were betting heavily on technology.

Just 29% of companies have digital strategy: Microsoft

Many U.S. technology companies have encountered difficulties operating in China, frequently drawing censorship from the government. On the other hand, Microsoft announced a Transparency Center in Beijing last year, where tech experts from the government can test and analyze the company's offerings closely before deployment.

For context, Microsoft said in a blog post: "Simply put, governments have the ability to review our products and services, both manually and by running tools, but they cannot alter what is delivered to customers."

Haupter, who was previously the chief executive officer of Microsoft's Greater China Region and was based in Beijing, said the Chinese government is interested in developing a regulatory framework. Officials, he said, were looking for companies that focused on addressing specific innovation needs in the local provinces in sectors like education, banking and technical training.

When asked about the complicated relationship between China and President Donald Trump's administration, Haupter said Microsoft was focused on understanding — and complying with — local regulations both in the U.S. and China.

"On top of that, we focus on customer value. Customers want to have innovative solutions, focus on growth and focus on optimizing their business and they want to play globally," he said.

— CNBC's Harriet Taylor contributed to this report.