China Software Market – 2018 is the Time to Join In & Prosper!
China software market is growing fast, especially in Shenzhen. The city itself is flourishing with various technology-related industries and is predicted to become the Silicon Valley in China very soon (Read more). It reflects that there will be another peak of software development in China.
In 2017, China IT services and software industry has already reached a profit of RMB $5,500 billion (USD $687.5 billion). With a growth rate of 16.5%, there are a total of 35,368 tech companies in China’s software industry in 2017. The figure reflects a prosperous market and rooms for foreign companies to enter the market.
Over 6,000,000 employees work in China’s software industry in 2017. Comparing with the figure in last year, the number increases by 3.4% with extra 200,000 people join in. With the increasing income of the business, programmers receive higher pay with a 14.9%-yearly rising on salary.
The statistics of China software market in 2018 certainly reflects its prosperity. In such a huge market, many foreign companies have entered the market and gained a lot from the business opportunities.
There are certain trends and special features of China software market you need to be aware of:
1. IT Service is the Most Profitable Sector
IT service, software, information security software, and industrial software are the four major sectors in China’s software industry.
From the latest data, IT service brought a net profit of RMB $2,900 billion, making it the largest proportion, 53.3%, of the whole industry. It is the fastest-growing sector, expand at a rate of 16.8%.
For the rest of the industry, revenue from software products takes up 31.3% (RMB $1,700 billion). Information security software and industrial software also exceeds RMB $100 billion, increasing by 14% and 19.9% each.
2. “Software Cities” in China
There are 8 “Software Cities” in China: Nanjing, Jinan, Chengdu, Guangzhou, Shenzhen, Shanghai, Beijing, and Hangzhou. Their software industries earn the 60% of China’s software industry income.
Such a massive nation like China needs to group software companies together to ensure their exponential growth and long-term development with no doubt. There are over 20 software parks in China, and the above 8 cities provide excellent environments for tech companies to expand and flourish in software parks.
So, what exactly are the standards of “Software Cities”? To become one of them, the city should be rich in resources and talents for software development in China. For instance, Nanjing has a total of 2 software parks that group the software companies together in 2015. They receive full support from the government through different policies. For those companies in the park with Independent Intellectual Property Rights and Self-owned Brand, the government will increase an extra 20% of the original allowance amount.
To encourage companies to be more international, Nanjing is actively recruiting Fortune 500 Computer Software & Information Companies around the globe to set up branches in the park.
Foreign software companies, including start-ups, are very welcome to these “Software Cities”. China software market is growing fiercely with the strong support from local government. China’s IT industry is expanding faster than ever before, which is definitely the golden chance for foreign investors!
Extended article: Top 5 Tech Influencers in China
China’s Top Tech Companies
To enter China’s software industry, these are the Chinese companies you should know. The professional China marketing agency Dragon Social team has made a list of information technology companies in China for your reference.
Tencent is one of the top tech giants in China. As the developer of WeChat and QQ, two nation-wide integrated communication platforms with over 95% Chinese citizens are using it, Tencent has a huge impact in China.
In 2014, Tencent already ranked as the 4th biggest IT company in the world, following by Google, Amazon, and eBay. In 2017, Tencent has a net worth of USD $390 billion. It surpassed the tech leaders in the US, such as Intel, Cisco, and Hewlett-Packard.
Tencent’s business scope is wide, covering from IT services to applications. For instance, except for WeChat and QQ, Tencent also develops payment tool, the WeChat Pay, music app, the QQ Music, and even AI technology, the Tencent AI Lab. A wide range of companies around the globe, both small and big, are currently partnering with Tencent. Undoubtedly, the networks and benefits that these firms received from the partnerships are tremendously huge.
Being the developer of Weibo, Sina Weibo is described as China’s Twitter. From the latest figure, the number of daily active users has accumulated to 172,000,000, with around 392,000,000 monthly active users.
Micro-blogging is definitely not a new concept. However, Sina Weibo has grasped about 57% micro-blogging users in China. On top of that, over 87% of the micro-blogging activities in China are held by Sina Weibo. Users of the platform post over 100,000,000 blogs everyday.
Sina’s income mainly comes from Weibo. In 2017, Sina Weibo solely generates RMB $7,713,000,000, doubled from the previous year. Such a large number indicates that Sina is also powerful on China’s internet.
Sohu has a total income of RMB $3,185,000,000 in Quarter 1 of 2018. Comparing with the same quarter of last year, the growth rate of this figure is 22%.
As an important Internet and IT services brand in China, Sohu is famous for its search engine, Sogou. Sogou is a company under Sohu and its most popular product is Sogou Input. Sogou Input is the first input method of Chinese language that provides faster and better user experience through a dynamic practice with the Internet. The high variety of vocabularies and accuracy of word recommendation attracts over 520,000,000 users, which make Sohu the top leader in the industry.
Sogou Input has drawn extensive investment from other Tech companies including Tencent.
NetEase is a pioneer in the development of Internet services for China. The company developed and operated some of most successful and senior online PC and mobile games in the country, such as Fantasy Westward Journey. As for the latest games, Onmyoji in 2016 was also a hit in the market.
On the other hand, email services of NetEase have a profound existence in China as well. After 16 years of development, 163.com email has accumulated a massive amount of users in the early stage of Chinese Internet development.
NetEase is often considered as the top 4 China tech companies along with Tencent, Sina, and Sohu.
Most of the top technology companies in China are very integrated in terms of their businesses. Some of them expanded themselves from other industries. Alibaba is an excellent example.
Become popular because of Taobao, Alibaba is unquestionably the giant in China’s E-commerce industry. However, the company did not stop there. In 2009, Alibaba developed Alibaba Cloud. It is currently one of the top 3 IaaS suppliers in the world.
Alibaba Cloud provides a whole set of cloud computing service for start-ups and other businesses on the Alibaba E-commerce platform. Firms and government departments around the globe are also the customers of Alibaba Cloud.
Alibaba is a multinational company that attracts thousands of partners to excel in the combining IT services with retail. AI is believed to be the future direction of Alibaba’s business too.
Massive China B2B Software Market
In such a large software market like China, the needs of tech and IT companies naturally unfolds the strong potential in the B2B software businesses. Various enterprise resource planning (ERP) and customer relationship management (CRM) systems (Read more about WeChat CRM), data mining, and IT services for companies are in great demand.
For instance, software company Odoo is expanding into the Chinese market to target small businesses (SMBs) in need of ERP systems.
Odoo is a leading enterprise software provider in Europe. Its ERP system is widely implemented in the region and with the biggest market share. Odoo has been known as the SAP killer, serving over 3,700,000 firms around the globe with over 950 partnerships.
2018 is the Time to Join
Odoo announced in a press release in April that it has launched a joint venture with Chinese cloud computing firm Inspur to expand into the market. The collaboration with Inspur attracts attention from the industry and is predicted that two companies will focus on providing SaaS service.
In a mature China’s software market, the traditional ERP systems are slowly being replaced by SaaS. SaaS is low-cost and easy to operate. However, in the country, most SaaS firms are young and small companies. Chinese IT companies and business firms are urging for professional services in the field.
Noticing this trend, Odoo expands to China in 2018. The company said that the profit they are gaining in this initial stage in China is “nothing compared to the size of the market.” Odoo also expressed it hopes to become China’s No. 1 cloud ERP player for small businesses as they have the ability and funding to tailor-made SaaS service catering to different needs. At the same time, the company will focus on China marketing and sales efforts to achieve growth.
Conclusion on China Software Market
China software market is growing larger and larger. Not only the B2C business but also the B2B business prospers. The dynamic changes generate thousands of opportunities. With more excellent local companies, multiple foreign companies are entering the market by expanding their business.
It is crucial to stick to the trend in China. The Dragon Social team is a professional China marketing agency that helps business to enter the country. If you have any questions, don’t hesitate to contact us!