Chinese ERP leader edges into US outsourcing market

One of China's leading local ERP (enterprise resource planning) vendors opened its first U.S. offices last month, but the software maker doesn't plan to hawk its wares in the highly competitive enterprise applications market here. Instead, Kingdee International Software Group Co. Ltd. hopes to use its expertise with the Chinese market to position itself as a consulting partner and outsourced labor provider for U.S. companies.

Headquartered in Shenzhen, China, 11-year-old Kingdee brought in 365.6 million renminbi (US$44.1 million) in revenue last year. Market researcher IDC places Kingdee in the number-two position in China's ERP market, with an 11 percent share of the market in 2002, the most recent year for which IDC has issued a report. The company has 50,000 customers in China using its ERP and CRM (customer relationship management) software, which includes separate suites aimed at enterprise and midmarket customers, a Kingdee spokesman said.

Last month, Kingdee opened its first U.S. offices, in Palo Alto, California, and New York. The company's goal in establishing U.S. operations is to broaden its international footprint and to connect U.S. companies seeking low-cost workers with the available labor pool in China, said Donovan Neale-May, Kingdee's U.S. representative.

"Kingdee isn't competing head-to-head with the Indian outsourcing crowd," Neale-May said. "For stuff that requires less technical insight, these guys are saying look, here's a market of programmers who are very proficient at debugging and localizing software and doing the basic maintenance and upgrade stuff."

Kingdee is targeting ISVs (independent software vendors) looking for contract labor to help with development. It is also interested in working with vendors moving into the Asia-Pacific market, and in extending its own market knowledge -- what Kingdee learns from its presence in the U.S., it can use to help its Chinese customers as they expand internationally.

Kingdee has worked in China with global vendors, including IBM Corp., Intel Corp., Microsoft Corp. and Hewlett-Packard Co., Neale-May said, but its strongest partnership to date with a U.S. company is with Sun Microsystems Inc. Kingdee signed on in April as a J2EE (Java 2 Enterprise Edition) licensee, and is working with Sun on language localization projects, Neale-May said.

"We've been in conversations with a product lifecycle management leader that's looking at the Chinese market, and with a hosted CRM company," he said. "They're saying, 'We're strong in Europe but we don't have a presence in China'. That's exactly what we can help with."

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