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?