Tencent to open third data centre in Japan

Tencent Holdings is planning to open a third data centre in Japan, after entering the country’s cloud market in 2019.

The Chinese technology giant’s Japanese business has posted triple-digit annual growth, driven by cloud services for games, said Poshu Yeung, senior vice president of the company’s international cloud operations, in an interview with Nikkei Asia.

"We are considering a third site for a data centre," said Yeung. "We have the experience, so this won't take much time."

The company entered Japan’s cloud market in 2019 but hasn’t shared its Japanese revenue or capital expenditure for data centres.

After entering overseas markets in 2016, Tencent currently has a presence in over 10 countries and regions. It currently operates 30 data centres outside China with new additions expected in Brazil and Indonesia, shared Yeung.

"Tencent will tap its experience in the gaming sector to support game companies in Japan and South Korea in expanding their customer bases to Brazil and Southeast Asia," explained Yeung.

He added that in the US and Europe, orders are growing for cloud services designed to link businesses there with their offices in China. Yeung revealed that US companies are not avoiding Chinese cloud services much amid trade frictions either.

What is Japan’s data centre market like?

The Japanese data centre market was valued at $6.9 billion in 2021 and is expected to reach $10 billion by 2026, according to research firm Arizton. In the country, Tokyo and Osaka were major data centre investment destinations in 2020, with other regions like Jobe, Nagoya, and Yokohama also projected to grow.

The largest data centre companies in Japan include Equinix & GIC, MC Digital Realty, NTT Communications, Colt DCS, and NEC Corporation. There are 208 data centres in the country, stated research from Cloudscene, with most of them located around Tokyo and Osaka.

In 2021, Greater Tokyo accounted for 57% of the distribution of the net supply of Asia Pacific tier I colocation data centre markets, according to CBRE Research. New data centre supply in four-tier I Asia Pacific markets, Greater Tokyo, Hong Kong, Sydney, and Singapore, totalled 305 MW in the second half of 2021. Two-thirds of this new supply was found in Greater Tokyo. Additionally, Chinese hyperscale cloud companies like Alibaba and Tencent have been early movers in emerging South East Asia, but those from the US are now catching up.

There is currently over 183 MW of data centre capacity under construction in Japan, research from Cushman & Wakefield revealed. This comes as the country’s government announced an investment of $46.8 billion in 2022 for accelerating rural-urban digital integration under its Digital Garden City State vision. This includes building over a dozen regional data centres in the next five years, completing the nationwide submarine cable network in three years, and bringing fibre optics into universal service by 2030.