Courting China the Oracle way

Courting China the Oracle way

Lela E. Madjiah, The Jakarta Post, Beijing

China is the envy of many fellow Asian countries for all the
right reasons. Its size is simply staggering and with a
population of over 1.2 billion, it is a market no one can ignore.

It is small wonder that businesses are either opening or
redirecting their investments to China, all clamoring for a slice
of the huge market.

Oracle Corp., the world's largest enterprise software company,
has taken extraordinary steps to woo China into its fold. It has,
for example, created a special business and technology forum,
Oracle World, which it brought to Beijing from June 11 to 14,
underscoring the company's 11 years of direct operations in
China. It has also made a special exception to China by having
its logo written in Chinese to emphasize the name it has been
known in China, Jia Gu Wen.

Indeed, China, with 22 million Internet users recorded in
2001, is a lucrative and interesting market for the software
giant. Currently, China is Oracle's third largest market in the
Asia-Pacific region after Japan and South Korea.

"China is unique because it doesn't have a technology legacy.
It goes straight to the Internet, Linux, wireless. China has
really leapfrogged," CEO Larry Ellison said in his Oracle World
Beijing opening remarks on June 12.

The U.S., on the other hand, is in the third, or maybe fourth,
computer generation and it's harder to persuade U.S. customers to
move to Oracle than selling to an unexplored market like China,
according to Ellison.

Oracle's new focus on China has created jealousy among other
Asian countries, India in particular. Indian journalists present
at the conference repeatedly "demanded" Oracle's confirmation of
its commitment to the Indian market.

"When are you coming to India?" asked one journalist.

Another demanded that Oracle hold a similar event in India,
saying, "You said China and India are two jewels in a crown, yet
you have never been to India".

India has every reason to be weary of China's growing
influence and appeal among investors in computer and software
businesses. It has nine computer companies producing 30 brands,
61 companies producing 278 different computer parts; five
companies producing six notebook and palm computer products and
13 software companies producing 32 software products. China has
officially projected it will achieve US$1.5 billion in software
exports in 2005. The figures are a far cry from India's $23
billion projection for the same year. Chinese exports between
April 2001 and March 2002 stood between $400 million and $600
million, while Indian exports for the same period were $7.8
billion, Sunil Mehta, vice president of the National Association
of Software and Services Companies (NASSCOM) was quoted as saying
in an April 25, 2002 Wired News article.

However, despite the huge gap, China poses a threat to India,
thanks to its skilled engineers and cheap labor. In fact, cheap
labor is one of the reasons behind Oracle's renewed commitment to
China.

Ellison stressed however that while cheap labor was key to a
cost-effective business, Oracle took a balanced approach to
building and selling.

"We don't just want to sell, we also want to build. We don't
want to have an American company in China. It has to be a Chinese
company run by Chinese," he added.

"Oracle in China is a local company. Ninety-five percent of
our employees are local," added Derek Williams, executive vice
president of the Asia Pacific Division.

Meanwhile, 70 percent of China revenues come from sales to
Chinese companies, while 91 percent of Oracle's business in China
is done through local partners. Oracle has 150 customers in China
currently using its E-Business Suite, or 20 percent of the E-
Business Suite market. Currently, there are 1,600 customers who
live on Oracle E-Business 11i.

The number of the company's local employees is also quite
impressive. It has 300 local employees who manage operations,
sales and support. There are another 100 workers at the Oracle
China Development Center in Shenzhen, which began operations on
June 1, 2002. The company is planning another center in Beijing
next year. The Beijing center will focus on e-government while
the Shenzhen site concentrates on commercial services.

Since localization of content and partnership are the
company's focus in China, Oracle has allocated $500,000 for this
year's certification training to help broaden the adoption of
Oracle technology in China, according to John L. Hall, senior
vice president of Oracle University.

All Oracle partners must be certified and certification can be
obtained through the Oracle Certification Program that offers
three levels of certification, namely Oracle Certified Associate
(OCA), Oracle Certified Professional (OCP) and Oracle Certified
Master (OCM). To this end, Oracle University serves as a global
training resource for Oracle customers, partners and employees
who use Oracle products. The university is the largest software
training business in the world, with 600,000 students per year,
including around 10,000 in China. There are now over 110,000
certified professionals worldwide.

The allocation of the huge training fund is consistent with
the company's recognition of the strategic importance of being a
first in a "virgin" market rather than trying to win over
customers who are already brand conscious. By giving China
special treatment, it can ensure a future market that is Oracle
literate. What better way to win a market than to educate it in
the way one runs one's business?