Cloudflare finds a partner for edge network services in China with

Cloudflare finds a partner for edge network services in China with

US-based Cloudflare Inc., a provider of edge networks services, has signed a partnership agreement with Inc., a diversified Internet company in China with $83B in revenue for 2019. As part of the agreement, Cloudflare will install its technology in 150 additional data centers in China, and will sell Cloudflare services in China.

Cloudflare’s partnership is with’s cloud unit, JD Cloud & AI. No financial details of the deal were released.

It is common for foreign companies to be required by the government to partner with domestic firms in order to create a significant presence in the Chinese market. Cloudflare will be installing its software and hardware in facilities, with the expansion taking place over the course of the next three years.

Cloudflare noted that will be responsible for operating the services as well as selling them to customers in China, but Cloudflare still operates all services outside of China.

“No Cloudflare customer traffic passes through the China network unless a customer explicitly opts into the service,” according to Cloudflare. “For Cloudflare customers that opt-in to proxying content inside China, traffic, and log data from outside of China is not stored in the China network or shared with our partner.”

This is not the first such deal for Cloudflare. Currently, Cloudflare noted that it operates POPs (points of presence) in data centers in 17 cities in China. The company’s first in-region partnership to create infrastructure was with Baidu in 2015.

Overcoming network performance and supply chain issues in China

Cloudflare has described a jumbled puzzle of digital infrastructures and regional markets across China, a puzzle that (along with protectionist policies) it says deters foreign participation in that nation’s digital economy. In terms of China’s network architecture, Cloudflare notes that the three major telecom companies operate distinct networks and sometimes even multiple independent networks within a region or province, making service coordination challenging. IP address management by the telcos adds to the challenge by single-homing traffic across a single network backbone, leading to frequent network performance degradation.

Cloudflare’s technology adds an overlay network that takes care of the routing and caching of content while enabling to sell new services such as cloud-based firewall, DDoS mitigation, and edge computing services. Cloudflare clients from outside China will be able to use the same edge configurations inside China as they would use with the company’s systems anywhere else in the world. clients get the ability to deliver content globally across Cloudflare’s network of POPs outside of China.

Cloudflare said that has a logistics system that includes 700 warehouses along with robots and fleets of drones that can cover delivery to 99% of China’s population. This has benefits for storage and installation of Cloudflare gear, but the company also suggested that another benefit will be that global customers wanting in-country logistics help will be able to leverage services.


Although revenues from China do not represent a substantial portion of Cloudflare revenues (the company generates 49% of revenue internationally, but does not break out APAC results), the company is continuing to invest in regional growth through deals such as the one with and Baidu, while also planning on investing in regional offices such as a planned operation in Tokyo, Japan.

All companies interested in the substantial cloud services market in China have to navigate a thicket of regulations and political concerns, and it seems Cloudflare has struck a workable balance between close partnerships and protection of its customers’ interests-so far. The opportunity has significant revenue upside for Cloudflare owing to JD Cloud & AI’s sizeable enterprise customer base, as long as Cloudflare is able to maintain that balance.

Jim Davis, Principal Analyst, Edge Research Group

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