Chinese cloud providers Alibaba, Huawei and Tencent collectively grew 22% in the third quarter of 2023 to capture 73% of the China cloud market’s $9.2 billion total Q3 spend, according to a new Canalys report.

Mainland China’s cloud infrastructure services market grew 18% year-over-year and represented 12% of worldwide spending on cloud services. The market remains conservative, however, and government and state-owned enterprises drove the majority of that growth. Nonetheless, the market has reached a stable growth phase, analysts noted.

Cloud vendor investments in artificial intelligence (AI) technology also drove growth in Q3, with Alibaba Cloud and Huawei Cloud launching AI model development platform that support third-party open-source AI model integration.

Canalys analyst Yi Zhang emphasized the importance of developing a robust ecosystem of partners to capture growth opportunities. “Achieving widespread deployment of AI technology is a nearly impossible task for vendors without the help of a range of partners,” Zhang said. “Combining technical offerings and expertise is vital for seizing market growth opportunities and driving value.”

Alibaba Cloud led the Q3 cloud services market with a 39% share. After abandoning its plan to spin off its cloud business unit, the vendor is pursuing profitability by reducing projects with low-margin profiles and continuing its cloud journey. Analysts highlighted the vendor’s Bailian AI platform and the recent launch of an inaugural data center in central China as Alibaba’s main Q3 successes.

Huawei came in at No. 2 with 19% market share. Its Q3 year-over-year growth of 16% was fueled by the cloud provider’s AI Gallery platform launch in September and its strategy for global expansion. The vendor claims to have observed a 400% year-over-year increase in the amount of cloud partners in Europe, and it aims to have 1,000 European startups as cloud customers in the next five years.

Tencent Cloud follows Huawei with 15% of the Q3 China cloud market. The vendor’s performance exceeded expectations after the vendor similarly reduced its low-quality and -value projects. The cloud provider also expanded its partner ecosystem and built out its range of cloud services for channel partners from 80 to more than 110.