The ERP Market In China

ChrisSchusterCy · ‎03-16-2023

The ERP Market In China

With a strong focus on manufacturing under the “Made in China 2025” strategy, efficient resource planning is more important than ever for companies sourcing from and collaborating with the Chinese market.

The Chinese ERP market started in the late 1980s, and with today’s increased demand for such solutions, the requirements have also increased. Today, many Chinese enterprises (around 35%) also have implemented SAP systems.

Generally, the ERP process is designed for rule-based mature economies that promote knowledge sharing and transparency. This can lead to conflicts in governance based systems like China. As part of the industrial internet industry, policies for ERP systems have been intensified. At the same time, the development speed of the ERP software industry is expected to continue to accelerate.

Main industries in China using ERP systems, Source: https://tenbagroup.com/the-erp-market-in-china/

In China, most large companies successfully use ERP software systems, including Principal Century, Puyuan Information, China Software, and the Xiaomi Group. The main industries that use ERP software are manufacturing, communications, construction, utilities, and transportation.

In 2023, the ERP market in China is expected to reach 2.2 billion USD with a growth rate of around 15% (compared to 11% globally). Consequently, the Chinese ERP market is about 4% of the global market.

There are more than 3,000 ERP software-related companies in China. The market is dominated by a handful of key players.

ERPs used by Chinese SMEs

Small and medium enterprises in the Middle Kingdom typically use local Chinese ERP solutions. However, SAP as the largest global ERP provider also dominates among Chinese SMEs.

Yonyou ERP by Beijing UFSoft (用友): 30%

SAP: 15%

Kingdee K/3 Cloud ERP (金蝶): 13%

Genersoft by Inspur (浪潮): 12%

Digiwin (鼎捷): 6%

Oracle: 6%

Infor: 5%

Aisino Corporation (航天信息): 4%

eAbax ERP (金算盘): 3%

Other: 6%

ERPs used by Chinese SMEs, Source: https://tenbagroup.com/the-erp-market-in-china/

ERPs used by Larger Chinese Companies

On the other hand, larger companies in the Middle Kingdom typically use international ERP solutions. Unsurprisingly, SAP as the ERP leader worldwide, is the most commonly used ERP system among larger Chinese companies.

SAP: 33%

Oracle: 20%

Yonyou ERP (用友): 14%

IBM: 8%

Kingdee K/3 Cloud ERP (金蝶): 6%

Talosoft ERP (神州数码): 5%

Infor: 3%

Other: 11%

ERPs used by larger Chinese companies, Source: https://tenbagroup.com/the-erp-market-in-china/

About SAP China

SAP’s globally renowned ERP system S/4HANA Cloud can be run on Alibaba Cloud among other cloud solutions, and represents an important globalization strategy. As a German company, SAP enjoys an excellent reputation in the Middle Kingdom.

SAP has been rooted in China for 30 years, employing more than 6,500 staff, and serving more than 16,000 companies in the Middle Kingdom. In the whole country, SAP has more than 100 official partners (according to the SAP Partner Finder) and more than 20,000 certified consultants – only the USA, Germany, and India have more SAP partners in their countries.

In China, there is an SAP User Group as well as dedicated job boards for SAP consultants. Likewise, on China’s largest job website demand for SAP consultants and developers is high. The monthly salary for SAP Consultants in China ranges from approx. 2,200 USD to 6,700 USD. Demand for talented specialists is high, which underlines the relevance of this business sector.

As such, SAP continues to increase the skills and capacity of China’s workforce and promotes China’s development of enterprises with many positive co-benefits. Thus, SAP contributes to building intelligent digital management skills in China, so China can positively impact the world economy and trade.

As part of SAP China’s strategy, the company is committed to contribute to China’s economic transformation as part of the country’s “in China, for China” strategy. Data transparency, linkage, and green development are part of this digital transformation process.

Limitations of ERP Systems in China

When choosing and implementing an ERP for the Chinese market, careful research and consideration should be applied. Insufficient knowledge of local regulations as well as cultural and technical specialties can become a liability and even disrupt workflows that are supposed to be streamlined.

Besides, knowing which type of Chinese to use can help businesses to reach more consumers in Greater China. When doing business in mainland China or targeting Chinese speakers in Singapore, the use of Simplified Chinese is mandatory. When doing business in Taiwan and Hong Kong, Traditional Chinese has to be used.

Further limitations may include language barriers, reporting formats, cost control capabilities, and the frequency of updates/software re-designs.

Leveraging the China Market Potential with ERPs

The Asia-Pacific, and the Chinese market in particular, are booming. Are you ready to leverage this potential?

Do you manage an international company, aspiring to expand into the Chinese market?

Foreign businesses often struggle with productivity, transparency, and internal controls when entering the Chinese market. ERP systems can help companies to synchronize internal processes, standardize routine tasks, collect and analyze real-time data, and comply with local laws and regulations. This is all the more important when the company’s management is not directly located in the Middle Kingdom.

If you choose to deploy your existing ERP systems to Chinese offices, consider two key aspects

connection speed

local regulations

ERP systems (and other software) hosted outside of China may face significant slowdowns in the Middle Kingdom and require additional investment to make them compatible with local compliance requirements, like the GAAP accounting standards.

Western companies that already use SAP can also use this system for Chinese subsidiaries as SAP is localized for the Chinese market.

Are you a business consultant provider, seeking promising new markets for expansion?

Help your clients to grow in the Middle Kingdom, expand their business, and get new customers. Likewise, by understanding the Chinese market, you can also acquire new Chinese and international clients.