Powering Asia’s World City with Interconnection

Larry Tam

Hong Kong is widely known as being fast-paced – those living in the city walk fast, eat fast, talk fast and think fast. There is no sector that better embodies this pace more than the enterprise IT sector which, since the turn of the millennium, has evolved at rapid speed throughout Hong Kong.

Selecting Hong Kong as an entry point to the Asia-Pacific market, has meant Equinix has witnessed first-hand over the last two decades how the fast-paced evolution of technology has continued to shape the city and transform the lives of those in it:

Networks – From wired to wireless

At the turn of the century, Internet access in Hong Kong was already mainstream with the city being home to more than a million dial-up subscribers in mid-1999. Mobile and wireless communications became increasingly prevalent as consumers moved from being tethered to roaming. Infrastructure evolved to support this shift, with mobile network bandwidth progressing from 2.5G to 3G in 2004.

Hong Kong introduced 4G in 2011 to satiate the need to deliver more content at a faster speed. And this was enough to satisfy Hong Kongers – for a while. Despite being an extremely small city geographically, Hong Kong’s mobile subscriber penetration rate reached 259.9% in 20181, with the number of mobile subscriptions (18.6 million) surpassing the territory’s population of about 7.5 million.

Today, the rise of mobile video streaming and rich content is pushing 4G technology to its limits, and now the Hong Kong government is already promoting and facilitating the development of 5G ahead of its planned launch in 2021. You can read more about the progression of 5G across the Asia-Pacific region in our recent blog post.

Payments – From cash to cashless

Hong Kong’s payment industry has evolved greatly over recent years. Moving from cash to cashless thanks to credit cards and the city’s stored-value card – Octopus.

In today’s mobile-first world, the city is now shifting to mobile cashless payments like Apple Pay, Alipay, PayMe, Samsung Pay, and WeChat Pay. According to the Hong Kong Monetary Authority, the total number and value of Stored Value Facilities (SVF) transactions increased by 30.2% during the first quarter of 2018 compared to 5.2% in the same period in 2017. This is despite the fact that several trades in Hong Kong – including taxis, wet markets and small retailers – are yet to move from cash payments, indicating the high potential for continued growth in this area.

The use of mobile payment services, like those from Alipay and WeChat Pay, is also further fostering cross-border transactions between mainland China and Hong Kong, offering convenience to consumers while greatly improving user experience.

Entertainment – From analogue to digital

As mentioned above, the content available to today’s consumers is much richer compared to that of twenty or even ten years ago. Be it mobile video content or advanced gaming, home entertainment in Hong Kong has evolved considerably – from traditional broadcast TV stations to immersive experiences either via HDTV content or online gaming platforms.

In recent years, consumers in Hong Kong have diversified to incorporate streaming services like Youku, Sohu, Netflix, and YouTube into their viewing habits. Major events such as US presidential elections, World Cup football matches and royal weddings are streamed live and consumed online with user generated platforms such as Snapchat, Instagram and TikTok also providing viewers with more video consumption options. With consumers expecting access to content anytime anywhere, the volume of multimedia data traffic will only continue to surge.

Retail – From offline to online

In an economy built on SMEs, rising property rental and labor costs have meant that an increasing number of brick-and-mortar stores are either moving completely online or adopting an omni-channel model. Online sales expanded at a CAGR of 15.1% between 2011 and 2016, compared to just 1.5% for overall retail sales over the same period, according to the Hong Kong Trade Development Council, proving that e-commerce is progressively playing a more significant role in the retail sector.

Those in the city have also proved receptive to a multitude of e-commerce portals including Taobao, HKTV Mall, Amazon, Zalora, and Carousell, to name a few, while Alibaba’s annual sales event, Singles’ Day, has caught the attention of those in Hong Kong in recent years. Social media is also proving to be a key channel in the sales cycle, as consumers search for online reviews and comments in this increasingly digital-first market.

Nearly 20 years in Hong Kong and counting

At Equinix, we know that key technological shifts, like those outlined above, are not possible without interconnection. That’s why we acquired Pihana Pacific Hong Kong in 2002 as the first step to establishing our footprint in the market and building out a hub for Asia-Pacific.

Thanks to Hong Kong’s strong economy, social-economic stability, and robust legal system, Equinix now has five data centers in the territory, and boasts a customer portfolio of over 500, including local companies and multinational corporations across different sectors. Here are some of our recent success stories:

  • Wing On, Hong Kong’s oldest homegrown retailer, is leveraging Equinix Cloud Exchange Fabric™ (ECX Fabric™) to deliver a hybrid cloud solution that has boosted competitive advantage and improved customer experience.
  • Locally-developed Sportag, a photo tagging and sharing portal designed for mega sports events, is now able to offer rapid photo searching and sharing via Platform Equinix®, enabling marathon runners to get photos in seconds instead of hours.
  • Ricoh Hong Kong is leveraging the multicloud access offered by Platform Equinix to launch and deliver new cloud services designed to support the digital transformation of Hong Kong’s workplaces.
  • Mainland China-based payment company, iAppPay, has been able to rapidly scale thanks to its deployment in our Hong Kong IBX data center, enabling it to support the growth of cross-border payments driven by Chinese outbound travelers.
  • Leading Chinese integrated communications operator, Guangdong Aofei Data Technology Co., Ltd. has worked with Equinix to extend its content delivery service via Platform Equinix into seven new markets, including Hong Kong, to meet rising global demand for Chinese content.

Continuous expansion in the digital era

Equinix is committed to helping our customers expand, and we will continue to support Hong Kong businesses in their quests to grow both domestically and internationally. Today we are excited to announce the expansion of two of International Business Exchange™ (IBX®) data centers in Hong Kong at a total investment of US$77 million. The expansions of HK4 and HK2 will add a total of 1,500 cabinets of capacity, bringing an additional colocation area of nearly 4,800 square meters upon completion.

Located in Sha Tin, the second phase of HK4 provides a new location option in Hong Kong for customers and a geographic diversity that will further enhance the interconnection we provide. Users will benefit from distributed infrastructure that is connected securely and dynamically to provide a seamless experience. On the other hand, HK2, in Tsuen Wan, will add 1,000 cabinets of capacity and approximately 3,300 square meters (35,400 square feet) of colocation space, becoming the biggest IBX center in Hong Kong.

In addition to this, we are always searching for opportunities to grow our footprint to address rising demand for interconnection bandwidth. According to the second annual Global Interconnection Index, Hong Kong is expected to see the fastest Interconnection Bandwidth growth in Asia-Pacific, growing at a 55% CAGR by 2021 as Hong Kong’s robust ICT and telecoms infrastructure, reliable energy supply, safety from natural disasters, its tech-savvy population, and geographical proximity to mainland China will continue to drive demand for interconnection.

We see a promising future for Hong Kong and are already building the infrastructure for tomorrow and beyond. Here’s to another 20 years of success!

Reference:

1 – https://www.ofca.gov.hk/en/data_statistics/data_statistics/key_stat/

2 – https://www.hkma.gov.hk/eng/key-information/press-releases/2018/20180622-3.shtml

 

 

Larry Tam
Larry Tam Vice President & Managing Director, Hong Kong