Breaking into China's IT boom

Australian IT firms may be puzzled as to how they can capitalise China's economic boom. Truth is, doing business in China isn't so much about relationships or reputation as it is about offering value.

Australian IT firms have little to no reputational status in China but that fact is mattering less as firms prioritise "value" over relationships in the Asian giant, according to the experience of one of the world's largest software providers.

CA Technologies China vice president Francis Sun says government regulation is no hurdle for foreign IT firms looking to do business in China, with only the financial services sector out of the main industries coming under tight restrictions.

For Chinese businesses looking for IT providers, the decades-old focus on building relationships is being replaced by the need to drive value and find business solutions, Sun said.

"Right now the value proposition is more important than the relationship," he said.

"You need to articulate how you are going to grow value, that's how you get that competitive edge in IT in China.

"It's not about how advanced your technology is, it's about proving how you can influence your customer's business, and how you can drive that business value."

Australia may be fixated over how it can break into China's economic boom, yet according to Sun, that enthusiasm isn't shared by our Chinese counterparts. We're just another blip on their radar.

"To be honest, there is quite little perception about Australian companies [in China]," he said

"There are only a small amount that have penetrated the market in a major way."

But Sun said this should not be a major concern as Chinese businesses really only see two options when considering IT providers.

"In China, you're either a local company or a multinational company," he said.

"That is the way they look at it. So it doesn't really matter if you are from the United States or anywhere else.

"CA Technologies now competes in China as a local company and we enjoy all the tax and employee benefits."

And he said that the idea that Chinese regulators were omnipresent in IT was overblown and that there was plenty of opportunity to provide IT services to state-owned enterprises.

"There is very little interference, there is some in the financial industry, but overwhelmingly they are keen to seen competition," he said.

"There is a lot of misleading information."

Sun said that CA Technologies was optimistic that the new Chinese leadership under President Xi Jinping and Premier Li Keqiang would maintain previous administration's focus on growth. Sun says that as it stands the government has kept to that promise. He says CA Technologies has found great opportunities in providing big data services to the country's retail industry which was only in a very early stage of implementation.

"The clear message from the leadership is that they want to maintain big growth," he said.

"We are still confident about the general strength of the economy in China.

"And the mood [in China] is still quite upbeat about future prospects."

Sun said only one-tenth of the population had been monetised and that there are great opportunities if companies were willing to make the leap.

"The coastal areas are seeing growth of about 3 per cent while areas in the west of the country are seeing about 20 per cent," he said.

"The temporary workforce in the east, which is about 8 million of Shanghai's 20 million population, are young, they are 50-70 per cent educated, and they will be key growth drivers.

"There are great opportunities there in the west where competition is not so well established."

For firms considering expanding into China, Sun says the best advice was not to "read the books on how to do business in China", but rather to go there and experience the business culture itself.

"My advice would be to spend time in China to understand it, listen to the sales culture, understand that things take time in China, it takes longer to establish trust but also there is greater loyalty at the end."

Sun said that although the value proposition was replacing the importance of relationship, the latter was by no means defunct.

A favourite example of an individual attuned to the unique Chinese business culture was the Oracle employee who answered a phone call from a Chinese businessman enquiring about the company "O. R. A. C. L. E."

"Yes, this is O.R.A.C.L.E., how can we help you?" the American immediately replied.

John Conroy travelled to Las Vegas with CA Technologies for its CA World conference. 

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