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November 2009. CRISIS in Chinese… Wei : DangerJi: Opportunity.

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Presentation on theme: "November 2009. CRISIS in Chinese… Wei : DangerJi: Opportunity."— Presentation transcript:

1 November 2009

2 CRISIS in Chinese… Wei : DangerJi: Opportunity

3 Formal name: People’s Republic of China (PRC) Capital: Beijing President: Hu Jintao Language: Mandarin Currency: Renminbi (RMB/Yuan) Land size: 9.600,000 km2, the third-largest Population: 1.36 billion (10% have western life standard) System: The Communist Party of China (CPC) Capitalist The Five Year Plan Country profile

4 Organisation Administrative organization: –23 Provinces –5 Autonomous regions –4 Municipalities –2 SAR (Hong Kong and Macao) 171 cities > 1 M Citizens 20 cities > 5 M Citizens  1981  1990  2005 Source: World Bank % of population living on < $1.25 a day

5 Internet population Source: World Bank

6 GDP forecast (in b. US$) Source: IMF

7 Shanghai’ population = 18,88 M people (including 5.2 M migrants and 152,100 foreigners) Shanghai’ GDP = Brazil’ GDP ie: Shanghai

8 Consumption « In this current financial crisis, IDC expects to see governments coming up with various stimulus packages » Source: Moody's

9 Where money is invested

10 ICT Import (in b.US$) source: OECD #4 Germany 105.502 #5 Singapore 80.674 #1 USA 273.360 # 3 China HK 154.416 #2 China 255.195

11 ICT growth in 2009 by IDC « Certain markets can expect higher growth, such as BRIC » Brazil 9.0% (#10 GDP, #26 ICT import) Russia7.5% (#11 GDP, #19 ICT import) India 10.0% (#12 GDP, #22 ICT import) China 9.0% (#3 GDP, #2 ICT import)

12 Foreign prospects More than 500,000 foreign- invested enterprises US$ 1 billion foreign investment per week Over 430 of the Fortune 500 are present in China 90% of the leading IT companies are in China Source: OECD

13 Chinese prospects Fortune 500 list includes 37 Chinese companies (11 in 2003) Chinese companies are going international July 2009

14 in Telecom 7 Principal Telcos in China Hundreds subsidiaries all over China

15 in Banks 31 Nation wide Retail banks + Thousands Regional banks 90 Foreign banks

16 in Insurances 86 Chinese insurance companies 40 foreign insurance companies & JVs in China

17 27 airline companies 16 state owned 8 privates 3 JVs in Airlines

18 in Distribution +150 major Retail / Distribution companies Fully open to foreigners since Dec.2004 Some Chinese: –Bailian Group –Beijing Gome –Dalian Dashang –Suning –Beijing Hualian –Wu Mart –Nonggongshang –Yongle –Chongqing General Trading Group –HOYODO

19 in Utilities: Electricity More than 200 suppliers: –China Southern Power Grid Co., Ltd (CSG) –North China Grid Co., Ltd –East China Grid Co., Ltd –West China Grid Co., Ltd –North United Power –China Huaneng –Datang Power –China Huadian –China Power Investment Corporation (CPI) –Shenhua Group –…

20 Shanghai Water Beijing Water Shenzhen Water Chongqing Water Exist in all the cities … one per large city ! in Utilities: Water

21 in eCommerce Purchase value of 325 billion €

22 2008 software sales revenue in Mainland China

23 Piracy? Punishment CCPC Large accounts Medium SME SOHO Consumer

24 Chinese culture and mindset Remember –5000 years history –23 Dynasties –56 ethnic groups –2000 years of wars –Confucius –Guanxi ( 关系 ) –Mian Zi ( 面子 ) –Feng shui

25 Confucius Confucius’ teachings and philosophy have deeply influenced Chinese thought and life Core concepts –Ren ( 仁 ): humanness –Li ( 礼 ): Social level and customs Chinese social system: Hierarchical (Rank) –Son & Father –Employee & Leader –Women & Man –Young & Old Tip: Always negotiate with similar persons (gender, age, title)

26 What is Guan Xi? - Literal: Relationship - In the business sense: social connections Now, any business, including local companies as well as foreign investors and marketers, inevitably faces Guanxi dynamics. - The right Government officials - Key personnel in companies Guan Xi ( 关系 ) Tip: To succeed in business it is not what you know, but who you know

27 What is Mianzi? –Literal: Face –The dignity of the person “Men live for face as trees grow for bark.” Mian Zi ( 面子 ) Tip: You only suggest ideas and let your interlocutor to take the leadership

28 Motivations of buyers Price –They negotiate to be sure they make the best deal. « Guanxi » On-site Support –Tangible: To use the technology –Emotional: To take leadership « Hierarchy » Technology and innovation –Proud to buy the latest one « Face » Strength of the foreign brands (Technology: Germany, Home appliances: Japan, Cosmetic: France) –To be secured –To enforce his image and reputation –Again and again: « Face »

29 Business models Best model First or two first years Sales partners + 1 local Pre-Sales Consultant (Virtual Office) 2 nd / 3rd and following years Opening of your own subsidiary (WOFE, not Rep. Office)

30 K… (BJ) M…. (BJ) Q… (SH) E… (SZ) German ISV specialised in Document Management Actions: –Four Distributors –One Pre-sales Consultant (Virtual office)

31 Complex solution: EAI-EDI-BtoB integration Strong competition: IBM-Websphere, BEA-Weblogic, Seeburger, Influe, etc. Expensive products No PR budget Unknown in Asia or In China Targeting medium & large enterprises

32 –Chinese CEO, Mr. Alfred Chuang –30 Distributors –3000 Partners Tough competition, ie: BEA –2000 customers in China –200 employees –December event « limited » to 4200 attendees

33 Actions: Strong leverage with the best players: –Chan… (Beijing), the leader in retail –Dea… (Shanghai), the leader in SCM –Ebiz…. (Taiwan), the leader in EDI for Greater China and ASEAN countries –Core (Hong Kong), the #1 one VAN for Greater China Local support with Presales Engineer Results: Break even on the first Fiscal Year Indirect ROI for the North American and European businesses A positive impact on employees and external relationships

34 French ISV specialised in ERP for Fashion and Distribution market 2005: Two market Discovery 2006: Detailed market study 2006: Appointment of two Distributors (ERP for fashion) 2006 – 2008: Virtual office (local support) 2008: Set-up of their WOFE Dec 2007: Prize PME France - China

35 German ISV specialised in CAD for The harness automotive industry (narrow market) Discovery of the Chinese market One strong local Support Engineer (Virtual Office)

36 Kun… (BJ), large Governments Imo… (SH) large Enterprises Newd… (FZ, BJ) Telecom US ISV specialised in application & IT monitoring for large accounts Actions: –Three Distributors –One Pre-sales Consultant (Virtual office)

37 Chinese ISVs also needs « Guanxi »: An Hong Kong ISV ranked 12th worldwide, Listed on US Nasdaq, 1700 employees, 50 offices, 300 M US$ revenue Needs of four additional Distributors Chin… (Shenzhen) Eas… (Shanghai) Tal… & Vis… …. (Beijing)

38 UK ISV specialised in EAM/CMMS mainly for the manufacturing market Four Distributors One Sales and One Support Ewa…. Shanghai. Xiamen.Guangzhou (Manufacturing) High-C…. Beijing (Manufacturing) Yoy T…. Beijing (Telecom)

39 SoftDatabase profile Established in 1992 Key differentiators –Entirely and ONLY dedicated to the software industry. –200 satisfied customers –Average of 4 missions per customer Shanghai subsidiary (WOFE) started in 2004 Atlanta subsidiary started in Oct 2008 A unique database –95% of the world enterprise software ISV, VAR, SI –« Manually » updated

40 200 satisfied customers

41 谢谢 (Thank you)

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