The Chinese data center colocation market will grow at 40% compound annual growth rate, reaching 380% of its current size by 2016, according to the latest report on the market by DCD Intelligence.

Enterprises in China are hungry for carrier-neutral data center space because incumbent government-controlled telcos are doing a poor job at managing traffic bottlenecks on their networks.

Hawkins Hua, the report’s author, said, “Inherent complexities inovleved in network connecitivity in the country have led to bottlenecks as internet traffic has increased. This has led to increased use of colocation facilities by enterprises wishing to bypass traditional inteconnection routes.”

State-owned carriers still dominate the market, however, collectively drawing two thirds of the country’s total colocation revenue. Many companies that are part of the recent influx of carrier-neutral providers are reliant on network provision and space by the state-owned giants.

Following network interconnectivity, other key demand drivers in China are infrastructure reliability, secuirty, scale and geographic coverage. Power costs and staffing issues also play a major role, as they do elsewhere in the world.

Regulations prevent foreign companies to establish operations in the country, so there has not been an influx of multinational data center providers. Some, however, have found ways into the market through partnerships with Chinese firms.

One of the world’s largest colocation providers, California-based Equinix, for example, entered mainland China in 2010 by partnering with system integrator Shanghai Data Solutions. Equinix is using the Shanghai company’s data center to provide services in the country.

The multinational followed the move with acquisition of Hong Kong-based Asia Tone in 2012, which had data centers in Hong Kong, Singapore and Shanghai. The Shanghai data center was under construction when Equinix bought the company and came online later that year.

To get the latest DCD Intelligence report on China’s colocation market, visit the DCD Intelligence website.