Page 2

By Darryl K. Taft  |  Posted 2006-01-09 Print this article Print

SAP says it has seen solid growth in its China business. Klaus Zimmer, president, SAP North Asia, said 2004 China revenue growth was almost 50 percent. SAP has more than 1,300 installations in China for more than 1,200 customers, Zimmer said.

Zimmer said SAP introduced the concept of ERP (enterprise resource planning) to China in the early 1990s, "and ERP has been a historical strength of ours as Chinese companies have looked to improve their internal management and efficiency in their first wave of IT adoption."

SAP now has about a 30 percent ERP market share in China, Zimmer said. "Many of our customers take up the MySAP Business Suite, which supports a comprehensive range of business processes, and we are actively promoting more of our latest products and technologies into the market, including SAP NetWeaver, and products such as MySAP Customer Relationship Management, MySAP Supplier Relationship Management and SAP for Banking. We also see growing interest in technologies such as RFID [radio-frequency identification], and we are already working with Chinese companies and universities in this area as well."

Chuang said two hot areas of opportunity for BEA and China are 3G (third-generation) mobile network technology and RFID. "The era of 3G in China is about to begin," he said. "The impact will be enormous."

3G and RFID "are the big wave opportunities coming in China, although nobody knows when the 3G license will be issued," said Marcus Tsoi, vice president and general country manager of BEA China and another former IBM executive. "But we believe it will be issued early in 2006." Meanwhile, BEA is in discussions with several partners about implementing RFID solutions, he said. Tsoi also said BEA is pushing SOAs (service-oriented architectures) in China.

"I think the China market, compared with the U.S. market or European market, there is so much [more] potential growth," said Tsoi. "But the China enterprises are lagging behind Europe and the United States in terms of processes, management systems. I see a timeline between the adoption of new technology in the U.S. versus what will happen in China. I have seen that it takes one to two years time for China to adopt new technologies behind the U.S."

The Chinese culture and history dictate that very little is done without using the proper channels.

"Channels are very important, especially in China," BEAs Liang said. "Its very crucial. You have to know what the customer looks like in China versus what the customer looks like in the U.S."

One of the major conduits for business in China is the government, be it federal, provincial or municipal. Chinas federal government has more than a dozen so-called Golden Projects, each with a major IT component. BEA has won half of these and participates in others as a subcontractor of sorts, Tsoi said.

Though Linux is rising in popularity in China, the majority of enterprises still prefer commercial software over open-source middleware. Click here to read more. Although the government selects winners through a bidding process, "if you wait until the proposal comes out, you are out of the game," Tsoi said. "So before that we have been working for months and years. Sometimes its years to help customers understand the product and even how the system should be designed. This is how the China market is unique.

"In the U.S., you pay a consultant for this kind of service," Tsoi said. "But in China, customers expect, Well, if Im going to buy your product, you should give this to me for free. Otherwise, why am I buying your product?"

Victory Lee, general manager of value-added software at Digital China Ltd., a Beijing-based software and services provider, as well as BEA customer, said that for a partnership to work in China, "first of all, the partnership, the cooperation must be built on trust."

Lee said partnerships between Chinas indigenous IT companies and multinationals will be necessary as China continues to develop.

"If you look at the GDP China has had in like 9 percent growth, most of it is coming from traditional manufacturing industries; that is the Made in China you know," Lee said. "However, the next wave of growth is going to come from the IT industry to sustain such growth. As the overall growth occurs, the investment in IT will be growing as well proportionally."

In 2003, BEA opened an R&D center in Beijing and shifted all product development for its Tuxedo line there.

Frank Xiong, general manager of BEAs Beijing R&D center, was educated in the United States and spent 20 years as a software developer and manager of development in the country. Xiong, also a former IBM executive, said, "If our software has been tested and hardened here to deal with this kind of volume, it can deal with any other market."

China is turning out about 600,000 engineers per year; the United States, 70,000; and India, 350,000, according to estimates. And although China continues to turn out more engineers than the United States, Xiong said he has noticed a difference between the engineers in the United States and those in China. He said he went in thinking he would need "1.25 Chinese engineers for each 1 engineer ... used in the U.S."

"But once I got here, I found out the engineers here are totally equipped and have the knowledge and skills to do the job very methodically," he said.

Still, with all the technology talent coming from within their own country, the Chinese dont have to rely so much on the outside world. "Ten years ago, people who are called Sea Turtles—people who have been educated in the U.S. and come back to China to work—these people were hot commodities," said Kurt Akeley, assistant managing director of Microsoft Research Asia. "They could command a high salary and get a lot of interest because you had those years of U.S. education. Thats not true now. Those people are considered to be overpriced."

Check out eWEEK.coms for the latest news, views and analysis of technologys impact on government and politics.

Darryl K. Taft covers the development tools and developer-related issues beat from his office in Baltimore. He has more than 10 years of experience in the business and is always looking for the next scoop. Taft is a member of the Association for Computing Machinery (ACM) and was named 'one of the most active middleware reporters in the world' by The Middleware Co. He also has his own card in the 'Who's Who in Enterprise Java' deck.

Submit a Comment

Loading Comments...
Manage your Newsletters: Login   Register My Newsletters

Rocket Fuel