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SCMP Reporter

Company unveils a two-pronged expansion plan to tap into fresh opportunities

Oracle is sharpening its focus on the mainland with a plan to expand its number of offices nationwide and build elaborate information technology research and development infrastructure in key cities.

China is the fastest-growing market for the enterprise software firm, and its growth strategy for the mainland comes after a 10-month acquisition drive in the United States that included buying global rivals PeopleSoft and Siebel.

Oracle president  Charles Phillips  unveiled the two-pronged approach last week on the sidelines of his three-day tour of Shenzhen and Shanghai, where he announced increased investments in research centres.

'We want to extend our business to more cities in China,' Mr Phillips said, noting that Oracle would open new offices 'in 30 to 40 cities within the next few years'.

That expansion is expected to help put Oracle in sync with the mainland software market, which is already one of the economy's fastest developing sectors with an annual growth rate of 38 per cent.

'As China increasingly embraces globalisation, government and commercial organisations alike are starting to re-look at their priorities, processes and management capabilities,' Mr Phillips said.

'They need the ability to respond quickly to changing regulations, fluctuating business demands and market opportunities. They need to show demonstrable return-on-investment, efficiency gains and profitability.'

After 16 years of operation on the mainland, Oracle counts more than 6,000 Chinese corporate customers. The software giant, known locally as 'Jia Gu Wen' and with mainland headquarters in Beijing, generated 50 per cent of total domestic revenues from sales to Chinese firms.

In the year to May 31, Oracle's China operations topped for the first time its total software licence sales revenues in the Asia-Pacific.

Research firm International Data Corp has forecast the mainland's information technology market to grow from about US$25 billion last year to US$50.8 billion in 2008. It said spending on IT would continue to be driven by the government, education, manufacturing and retail sectors.

Oracle last week inaugurated new competency centres in Shenzhen that catered to its large network of partner independent software vendors (ISVs) on the mainland.

Located in the Shenzhen Software Park, the Oracle Competency Center offers a set of processes, tools, best practices and services free-of-charge to qualified ISVs. Porting, testing and migration services, conducted in a secure environment, enable ISVs to migrate confidently from other third-party vendor software to Oracle systems, including its database and middleware products.

'At the core of Oracle's global strategy is our commitment to work with and invest in developing our partners,' Mr Phillips said.

'In China, this strategy becomes even more important as more than 90 per cent of our business is conducted through partners, among which ISVs are a major force.'

Oracle also opened its Carrier Grade Framework (CGF) Competency Center at the firm's China Development Center in Shenzhen. The CGF facility, featuring a development team from Oracle and Intel, will drive the adoption of standards-based technology in communications networks worldwide.

Liu Zhongpu, director of the Shenzhen Science and Technology Information Bureau, said the new centres would help promote the development of the IT industry in Guangdong province and the rest of the south China region.

The estimated value of enterprise software output from Shenzhen last year was about US$5.5 billion, representing more than 20 per cent of the national software revenue of 230 billion yuan, according to Oracle.

In Shanghai, Oracle signed a deal with Shui On Land to adopt its software platform for the property developer's Knowledge and Innovation Community residential and office complex in Yangpu district.

Oracle will also set up a technology solutions centre for developing digital community related-technologies, including integrated home networks and advanced property management and communications systems.



Oracle puts China at the centre of growth strategy