US-China tech war: software maker Kingdee sees opportunity in shift to domestic cloud services market

President of Kingdee, China’s biggest corporate software maker, says current trade tensions are a ‘once-in-a-lifetime’ opportunity for domestic cloud companies

Kingdee’s cloud transformation hit profits last year with a loss of more than US$50 million, but the company says it is seeing strong growth this year

Reading Time:3 minutes

Shen Chongfeng, rotating president of Kingdee, China’s biggest corporate software maker, says the company is investing heavily in cloud services to capitalise on a shift to homegrown software amid the US-China tech war. Photo: Iris Deng

Published: 7:00pm, 4 May 2021Updated: 9:51pm, 4 May 2021

Kingdee International Software Group, China’s biggest enterprise software company, is expanding in cloud services at the expense of short-term profits to capitalise on what its president calls a “once-in-a-lifetime” opportunity, as the US-China tech war pushes local firms to rethink their reliance on American technology.

Cosmic, Kingdee’s cloud services business for large corporations, is expected to double its revenue in 2021, capturing part of a domestic boom fuelled by the country’s push for technological self-reliance and software localisation, the company’s rotating president Shen Chongfeng said in an interview with the South China Morning Post in Shenzhen on April 21.

Revenue for Cosmic, which targets large Chinese enterprises, tripled in 2020, reaching 190 million yuan (US$29.3 million) as it signed up more than 300 new clients. Tensions between Washington and Beijing have led Chinese state-owned enterprises (SOEs) to start ditching software from US-based Oracle and Germany’s SAP for homegrown technology providers.

“We are facing clients that have the demand to replace their enterprise software with domestic systems, especially state-owned enterprises, and even those that used to be clients of SAP and Oracle,” Shen said.

In recent years, Beijing has stepped up its push for homegrown technology development in the semiconductor and software sectors, offering tax incentives and broadening channels for financing, among other policies, amid a protracted tech war that has expanded from 5G and chips to internet services. Chinese President Xi Jinping has called on domestic companies to be patriotic and innovative, asking them to align their business strategies with China’s needs.

Select Voice

Choose your listening speed

Get through articles 2x faster

1.25x

250 WPM

Slow

Average

Fast

00:0000:00

1.25x