HONG KONG—The idea of data centers may conjure the image of a sprawling, squat row of nondescript buildings somewhere on pastoral U.S. land. Space is important, and proximity less so—there is no obvious reason to plop a data center in the middle of the city.
Yet the Hong Kong government is pushing for the crowded metropolis to become a hub for data centers serving the region, describing it as a race against rivals like Singapore and Malaysia. Proponents say the city is an ideal place for this industry, and it is hard to argue against their logic.
The government points out that there is demand for data centers by the city’s thriving financial and logistics sectors. It also stresses that the city is not prone to earthquakes or tornadoes, and it has an unusually reliable electrical grid, because of the way the duopoly power providers can back up one another.
But its advantageous location, as the gateway into China, coupled with a unique position of political freedom, makes the city really stand out as a spot to host data, says Charles Mok, a lawmaker and entrepreneur who advocates for the development of a strong information technology sector here.
“One big reason for many of these data centers to be placed here—even including many of the Mainland telecom companies, like China Telecom, China Unicom, and so on, they are building very big data centers in Hong Kong—is because they want to be outside of the China firewall, while being able to be close enough that they can still serve China,” he said.
“Imagine the trouble they have to go through and the prohibited zones they cannot operate in in China. That does not exist in Hong Kong. As long as they’re willing to invest, they can come here and get licensed, and do almost anything they want,” he said.
Ganesan Periakarruppan, a Kuala Lumpur-based analyst at Frost & Sullivan, a market research firm, says Singapore, Australia, and Hong Kong are the strongest markets to grow data center industries in the Asia-Pacific region because, in addition to not being prone to natural disasters, they have a strong English-speaking pool of I.T. workers.
Ganesan says that the greatest challenge in Asia is to be able to maintain Tier 4 data centers, the highest level, which specifies electrical power and cooling requirements, which can scarcely be met anywhere in Asia save for Hong Kong and Singapore. “As long as you’ve got continuous power, there are no other challenges,” he says.