Oracle Expands China Presence with Beijing Development
Center
Oracle, the leading corporate database company, has opened
a new Beijing research and development center as part
of its ongoing expansion to serve the Chinese mid- and
large-size corporate market.
This is the second engineering facility Oracle has opened
in China; the first being a facility in Shenzhen, across
the border from Hong Kong. That facility employs about
100 software developers. The company expects to hire 75
more developers in China in the coming year.
China is now Oracle's fastest growing market, registering
more than 50 percent growth over the past year. The company
attributes the fast growth to Chinese corporation's push
to become more competitiveand efficient after China's
joining WTO in 2001.
The facility will mainly focus on adapting Oracle's database
products to the needs of its Chinese domestic customers.
In 2003, the leading US software makers, including Microsoft,
have shifted away from a "one-size-fits-all"
policy of selling to Chinese customers Chinese language-localized
versions of products they have previously launched in
the US market, to customizing, developing and marketing
products specifically tailored for the needs of their
Chinese customers. This is justified because of the immense
size of the Chinese market, and its opportunities for
growth. So far, they have not done this for other markets.
SAP, the leading German-based corporate applications
maker and a major competitor of Oracle, has also set up
a China research and development center in Shanghai.
Microsoft claims that it has never shown a profit in
China because of widespread software piracy. However,
capitalizing on the large number of scientists and hardware/software
engineers pumped out yearly from its universities, China
has developed into an important global development center
for the company. A significant number of Chinese developers
are believed to be involved in the development of Microsoft's
next-generation Longhorn operating system, which held
its first developer's conference in Los Angeles this week.
Previously, corporate products have been mainly sold
to Chinese government ministries and Chinese/foreign-owned
joint ventures. The government ministry clients and state-owned
enterprises (SOEs) routinely managed employee head counts
of more than 50,000. Now, Oracle and its competitors are
selling to mid-sized businesses. Many of these seond-generation
clients are newer privately owned enterprises. This has
brought Oracle and SAP into conflict with Chinese software
makers such as Kingdee International Software Group and
UFSoft Co. The result has been that they have had to drop
their license fees much lower to compete with the Chinese
companies. Licenses for SAP Business One in China begin
at US$9,500, compared to more than $1 million common for
the company's large enterprise products offered in the
North America and European markets. Compared with US clients,
the reporting needs of Chinese clients is not as sophisticated.
This suggests that the software companies will offer
simpler, cheaper products to offer and ring in their Chinese
clients, then gradually offer more expensive and sophisticated
software as their clients' needs grow.
Chinese businesses purchased $142 million of accounting
software and 85.5 million of enterprise software products
in 2002.
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