The public cloud market is evolving quickly in China. Encouraged by the success of Amazon Web Services, Chinese Internet giants are beginning to enter the cloud market in earnest.

Alibaba Group Holding Ltd, Tencent Holdings Ltd and other domestic players are investing heavily in cloud infrastructure and services, which is shaping the early competitive pattern.

However, China's cloud market is facing challenges, including regulatory issues and limited infrastructure. These restrict enterprises from gaining value from cloud adoption and devalue the benefits that cloud services can provide. These issues must be addressed before mainstream cloud adoption arrives in the next two to three years.

First and foremost, complex regulatory requirements prolong cloud provision time, pushing IT leaders to plan ahead. China's regulations don't allow global players to offer cloud services alone. They must partner with local companies to obtain the necessary licenses. In addition, cloud service provision and daily operations need to be conducted by the local partners.

Global cloud providers such as Amazon Web Services and Microsoft also physically separate their Chinese cloud implementation from their global cloud platform due to security concerns from both the Chinese and US governments. This separation makes it impossible to implement inter-region migration and data replication.

Chinese enterprises and multinational companies in China have encountered challenges to plan their cloud migration when they adopt foreign cloud service providers. They either choose a separate Chinese cloud with limited sharing features with a global system, or adopt cloud infrastructure out of China with somewhat-long latency.

Another issue is the "cloudwashing" phenomenon, which requires IT leaders to scrutinize vendors' offerings and product roadmaps. "Cloudwashing" means enterprises sometimes obfuscate and make unsubstantiated claims about their cloud offerings.

There are many cloud-like products and services in China's market, such as virtual private servers. These players claim enterprises can enjoy scalable IT resources that are similar to the public cloud but in a more controlled environment. They also promise to offer customized solutions to enterprises that have complex IT applications and many compliance requirements, especially large enterprises that are more cautious about cloud adoption.

However, such services may be unlikely to live up to their claims. Businesses would not receive the expected benefits in terms of scalability, elasticity, self-service and a high degree of automation.

The incapability of Chinese cloud service providers makes the situation worse. China's cloud market is immature, although it is under rapid development.

Today, many Chinese cloud service providers only offer basic cloud features such as elastic computing and storage. They lack rich and deep cloud functionality and features as well as ecosystem partners to address businesses' requirements. The immature nature of cloud products and services hold back businesses, especially large enterprises, on their perception of the value of cloud services in China.

The author is principle analyst at Gartner Inc.