Salesforce is ramping up its presence in the Chinese market, signing an exclusive sales agreement with internet giant Alibaba.

As part of the partnership announced today, Alibaba will become the exclusive provider of Salesforce to customers in mainland China, Hong Kong, Macau, and Taiwan. And Salesforce will become the exclusive enterprise CRM product suite sold by Alibaba in those markets.

The brief announcement said Alibaba will sell Salesforce products including its Sales Cloud, Service Cloud, Commerce Cloud and Salesforce Platform through Alibaba Cloud. This arrangement will provide localised solutions for Salesforce’s global customers operating in China, while still complying with the country’s privacy and data sovereignty rules.

From Alibaba’s side, the Chinese company is positioning its cloud division as a Platform-as-a-Service (Paas) provider and wants SaaS players, like Salesforce, to build on top of its cloud infrastructure.

Salesforce previously had a limited presence in China. It has an office in Hong Kong but not in mainland China.

Gartner analyst Olive Huang told Which-50 policy hurdles have made China a less attractive market for an international cloud software vendor like Salesforce, which has grown strongly in other parts of the world.

However, Huang says Salesforce customers operating in China needed the company to come up with a solution to comply with Chinese data sovereignty regulations passed in 2017 which require data created or collected for business activities in China to be stored in mainland China.

“For Salesforce customers, China is a very important market so once the privacy legislation passed that gave Salesforce basically no choice, they have to do something,” Huang said.

There is no official date when the services will be made available, but the partnership will give the CRM giant local expertise and data residency.

While Salesforce software can run in the public cloud, for example on AWS in Australia, moving the products to AliCloud will be a “major engineering challenge” Huang said.

It is common for international cloud providers to work with a local Chinese partner, Huang said, for example, Microsoft and Amazon run their clouds with partners.

“Salesforce’s partnership with Alibaba is another example of international cloud vendors finding solutions to offer privacy-compliant software services to serve their customers in China,” she said.

While the kind of partnership isn’t new, the size and scale of Salesforce and Alibaba make it a significant announcement and it leaves the door option for potential future innovations if the two can navigate their new relationship successfully.

“The strategic partnership between the largest CRM vendor in the world and the largest digital commerce ecosystem and IaaS player in China surely leaves space for additional imagination,” Huang writes in a Gartner blog post. 

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