• Chinese cloud giants are growing in the Middle East by aligning with national strategies.
• They offer localised AI and support data sovereignty through state partnerships.

Chinese cloud providers are quietly reshaping the Middle East’s digital infrastructure landscape, not by competing head-on with US IT firms on technical benchmarks, but by aligning more closely with national strategies, data sovereignty goals, and local partnerships. Their rise highlights a broader shift in how Gulf governments evaluate digital service providers, prioritising cooperation, flexibility, and alignment with long-term development goals and not just performance.

While Amazon Web Services, Microsoft Azure, Google Cloud, and Oracle entered the region early and built out data centres across Bahrain, the UAE, and Saudi Arabia, Chinese firms like Huawei, Alibaba Cloud, and Tencent have made steady inroads by working in lockstep with state-led digital agendas.

Huawei, for instance, now operates four cloud facilities in Saudi Arabia, including a low-latency data centre designed to meet real-time processing needs. According to Rest of World, Huawei has onboarded over 1,000 clients—including financial institutions and government agencies—through its Riyadh hub within just two years. Meanwhile, Alibaba Cloud has launched data centres in the UAE and Saudi Arabia in a joint venture with telecom provider STC. These investments are directly tied to Saudi Arabia’s Vision 2030 initiative, which prioritises economic diversification through tech development.

Government-backed cloud growth in MENA

The cloud market in the Middle East is expanding rapidly, fueled by digital transformation initiatives and government-backed cloud-first strategies. According to IDC, the public cloud market in the United Arab Emirates alone is projected to reach $5.9 billion by 2028, growing at a compound annual growth rate (CAGR) of 21.7%.

Meanwhile, Oracle has committed to investing $1.5 billion to expand its cloud footprint in Saudi Arabia, including a new public cloud region in Riyadh. Key growth drivers across the region include data localisation mandates, increased demand for AI-led services, and national efforts to modernise IT infrastructure.

Chinese providers have turned regulatory compliance into a competitive advantage. “They have also formed strategic partnerships with government entities in the region, especially in Saudi Arabia, to ensure compliance with local data laws,” Manish Ranjan, IDC’s director of cloud research for the EMEA region, told Rest of World. These partnerships have helped firms like Huawei and Alibaba gain traction in sectors such as finance, healthcare, and smart cities—areas where data sovereignty is critical.

Regional parallels and strategic contrasts

This government-led approach in the Middle East contrasts with the cloud market in Southeast Asia, where growth is driven by digital trade, startups, and consumer services. According to the World Economic Forum, while Chinese cloud providers are active in both regions, their partnerships in the Gulf are deeper and state-integrated. Similar dynamics are playing out in Africa as well.

According to research from institutions such as the China-Africa Research Initiative, companies like Huawei and Alibaba are expanding in Kenya and Nigeria through training programs, infrastructure projects, and local partnerships. Meanwhile, US cloud firms frequently face regulatory frameworks and data sovereignty concerns.

Tencent Cloud launched its first Middle East cloud region in Saudi Arabia during the LEAP 2024 conference, marking its formal entry into the region’s cloud infrastructure race. The company said the new region will help reduce latency, improve data sovereignty compliance, and support Saudi Arabia’s Vision 2030 digital transformation goals. Tencent is targeting industries such as finance, media, and gaming, aligning with growing regional demand for localised AI and cloud services.

AI customisation and local relevance

One area where Chinese firms have pulled ahead is localised artificial intelligence. At the Huawei Global AI Summit, the company showcased Arabic-language models that cut hospital diagnostic times by up to 40%—a use case that resonated with Saudi stakeholders. While US cloud providers offer powerful AI platforms, they have been slower to tailor those capabilities to regional needs.

Luis Bravo, an analyst at Texas-based data centre firm Hawk, told Rest of World that “success in the Middle East depends as much on trust and cooperation as it does on computing power.” For CIOs navigating complex government requirements, Chinese cloud firms often bring a clearer understanding of local priorities, bundled offerings, and fewer bureaucratic hurdles.

Hybrid models still matter

Not every organisation in the Middle East is ready to go fully cloud-native. Kenneth Lindegaard, CIO at UAE-based space tech firm Space42, explained that some industry workloads are still best handled on-premises. “The cloud market is very competitive, and there are many players,” Lindegaard noted in comments reported by Rest of World. “Regulations like data localisation are risky because not every provider can justify building cloud data centres in all countries.”

Chinese cloud providers anticipated this demand for hybrid models early and built their regional strategy around it. By offering flexibility—whether through edge computing, modular data centres, or regional cloud hubs—they’ve positioned themselves as adaptable partners for public and private entities alike.

Final thoughts

Chinese cloud companies are proving that success in emerging markets isn’t just about technical performance—it’s about proximity to national strategies and willingness to play the long game. In the Middle East, that approach appears to be paying off. While US firms still hold a substantial share of the region’s infrastructure, the balance is shifting in favour of providers that can deliver compliance, custom AI, and long-term alignment with state priorities.