Kingdee wants to conquer Asia

Buoyed by its success in China, the homegrown ERP software maker is spreading its wings into the rest of Asia, amid branding challenges.
Written by Aaron Tan, Contributor

SINGAPORE--Chinese ERP (enterprise resource planning) software vendor Kingdee is now expanding its footprint in the Asia-Pacific region after conquering its home turf.

According to analyst company IDC, Kingdee has been leading China's ERP software market in the small and midsize (SMB) segment for three consecutive years. Its market share grew steadily from 19.41 percent in 2003 to 21.45 percent in 2005.

Zeng Liang, vice president and general manager of Kingdee Asia Pacific, told ZDNet Asia recently: "We're very successful in China, and we're now looking to expand outside China."

According to Grace Han, IDC's China software and service research manager, Chinese vendors have become major industry players in terms of product technology, implementation capability, sales network and service support in the country's enterprise applications market.

"Local vendors have done well in the manufacturing, government and SMB sectors," Han said in a statement. "Compared to their multinational peers, local vendors have distinct advantages in product localization and sales and channel networks. Moreover, they are more familiar with the local demands of specific users and market industries."

In 2001, Zeng said, Kingdee set its sights on overseas expansion by establishing its Asia-Pacific headquarters in Hong Kong. In 2005, the company was listed on the Hong Kong stock exchange to tap funds from international capital markets.

"We also had to have better corporate governance, and that has helped us to become a more global company," he said. "Kingdee hopes to be the leading ERP software vendor for SMBs in the Asia-Pacific region by 2010."

As a channel-focused company, Zeng said Kingdee is depending on partners in Singapore, Malaysia, Indonesia and Thailand to grow its Asia-Pacific business. These include YGL Convergence in Malaysia and Singapore, as well as SCS-Agit in Indonesia.

Zeng admitted that Kingdee will face challenges ahead as the company seeks to establish itself in Asia-Pacific markets, where its better-known international rivals already have a strong presence.

"We will face these old friends again [outside China], and there are things to overcome because we're new in those markets," he said, adding that Kingdee's branding, for instance, may not be as strong in these markets as it is in China.

However, through joint marketing efforts with global IT vendors such as IBM, Hewlett-Packard and Microsoft, Zeng is confident that Kingdee can expand its footprint in the Asia-Pacific region.

He noted that intimate knowledge of the Chinese market has helped Kingdee boost its profile among multinational companies, such as American fast food chain MacDonald's, operating in mainland China.

Kingdee's "cross-border" ERP product, Zeng claimed, can help global companies manage data flow from their China offices to elsewhere around the world. "A lot of multinationals want some balance between Western style management practices and Chinese localization features," he explained.

Part of Kingdee's success among SMBs can also be attributed to the company's ERP integration platform, called the Business Operating System (BOS), Zeng said.

Similar to German software giant SAP's NetWeaver platform, BOS allows SMBs to break down business processes into service components--a key SOA (service-oriented architecture) concept--so that it is easier for companies to customize their software to meet specific needs.

Zeng said: "Usually, other ERP vendors' development platforms are only available for large enterprises. But in the SMB segment, Kingdee is the only vendor I know that has such functionalities."

Although the BOS platform is currently not based on any SOA standard, he said efforts are underway to develop the platform into an SOA-based infrastructure.

Zeng said BOS is expected to be SOA-compliant as early as June this year. "IBM, our close partner, will work with us to speed up this process," he said, but declined to provide more details on the extent of Kingdee's relationship with Big Blue.

Inventory tracking for Pan Sun
Pan Sun Hardware, a Singapore-based industrial fastener maker and supplier, is in the process of rolling out Kingdee's ERP software to track and manage its inventory of 20,000 product lines. The SMB has more than 40 employees.

"We've used several solutions before, but we've had problems tracking the accuracy of our inventory because it's too huge," said Mary Tay, general manager of Pan Sun Hardware.

Tay hopes that Kingdee's software, which will be fully deployed by the end of this month, can improve the visibility of Pan Sun's inventory.

"Right now, only 70 percent of our inventory system is computerized while the remaining 30 percent requires manual input," she explained. With a new barcode system integrated with Kingdee's software, Tay said that Pan Sun's inventory system can now be fully computerized.

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