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Dell Backs Startup to Attack Chinese Cloud Market

Michael Dell Addresses Oracle Open World ConferenceMichael Dell Addresses Oracle Open World Conference
Dell CEO Michael Dell.Photo by Justin Sullivan—Getty Images

The Chinese market for cloud computing services keeps getting more interesting as Dell launches a local startup to sell cloud to small and medium businesses.

On Wednesday, Dell founder and chief executive Michael Dell helped launch Guizhou YottaCloud Technologies, a company that will sell cloud services to small and medium businesses in China, according to China Daily.

In cloud computing, companies take software that they once ran on their own servers and run it on equipment owned and operated by another party for that purpose. That’s a useful model for companies who don’t want to build or expand their own data centers.

The news came during a visit by Mr. Dell to a big data summit in Guiyang, the capital of the Guizhou province, according to the report. Last fall, Dell announced “a plan to invest $125 billion in China over the next five years.

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With this startup, Dell is entering a vibrant market. Local incumbents include Alibaba’s (BABA) Aliyun cloud unit, Baidu, and Tencent, all established giants in China. Over the last few years, U.S. tech powers Amazon (AMZN) Web Services, Microsoft (MSFT), and IBM (IBM) have flooded the zone as well, opening up cloud data centers in China.

Obviously, given the size of China’s population, there is huge potential for cloud providers, but local rules and regulations make it a tricky one for U.S. players to navigate. To participate, they must partner with a local provider. IBM and Microsoft are aligned with 21Vianet, and AWS with ChinaNetCenter and SINNET, for example.

On top of that, there are thorny issues around Chinese censorship and suspicion on both sides about industrial espionage and hacking.

For more, read: IBM Takes BlueMix to China

Last year, Bain Capital estimated that the cloud computing market in China, which stood at about $1.5 billion in 2013, will grow to $20 billion by 2020.

The Dell-backed startup is owned by Guizhou Wing Cloud High Technology, which has worked with Dell on cloud services for a year, according to the China Daily report. Fortune reached out to Dell for comment and will update this report as needed.

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Dell’s been a busy guy. He’s in the midst of engineering the blockbuster $59 billion Dell-EMC merger slated to close by October.