Software giant to boost investment in China partners
German software giant SAP is looking to increase investments in local technology partners, as it is locked in fierce competition with Chinese enterprise application suppliers on the mainland.
SAP, the world's largest supplier of business-management software, expected the strategy will make it more competitive in securing small and medium-sized enterprise (SME) accounts and public sector projects across China.
'We have to be more local, and that means working closely with domestic systems integrators and other strategic partners,' said Klaus Zimmer, managing director of SAP China and president of SAP North Asia. 'We will make investments similar to our recent deal with the Neusoft Group.'
SAP last month paid more than Euro10 million ($97.84 million) for a minority stake in Neusoft, one of China's leading information technology services and training firms with more than 8,000 staff and sales of 2.8 billion yuan last year.
Mr Zimmer said China's demand for business management software - including enterprise resource planning, customer relationship management and supply-chain management applications - would continue to grow over the next few years with much of it driven by SMEs.
The Neusoft deal and other local partner investments will help SAP, which operates mainly from six cities with more than 1,100 employees, reach more potential customers through known market specialists. SAP has about 30 local partners on the mainland.
'We believe that software is becoming an integral part of society and daily life, and that this is changing the way companies in China operate,' said Neusoft chairman and chief executive Liu Jiren. 'As small and medium-sized businesses in China become more aggressive users of ERP technology, we see opportunities for expanded training and solution offerings in several industries.'
The mainland ERP market is worth about US$200 million, with aggressive local players such as Kingdee International Software Group and Ufida dominating the SME segment.
Ufida, for example, last year was ranked the No1 local ERP software vendor in the Asia-Pacific region, excluding Japan, by research firm International Data Corp.
By comparison, SAP has prospered by focusing on large domestic enterprises and other multinationals, helped by international systems integrators such as Accenture, IBM and Bearing Point.
With a compound annual growth rate of 70 per cent over the past nine years, SAP is one of the most profitable foreign companies in China. The firm vowed in January to grow its Asia-Pacific software sales by about 17 per cent this year, higher than its global forecast of 15 per cent to 17 per cent.
