Are YouReady for China?

China-Ready International-CompatibleEnterprise Software

Toa CharmGeneral Manager, Asia/Pacific

Kingdee International Software Group

Agenda• Opportunities and Risks of Doing Business in China

• How Different are the Application Software Requirement in China fromthe Rest of the World ?

• Three typical examples in China– a typical Hong Kong company with HQs in HK and factories in China– a typical Fortune 500 companies with A/P HQs in HK and operations in China– a HK-listed Chinese Enterprise with hundreds of subsidiaries in China.

• Overview of Application Software Market in China

• Criteria in choosing the “Right” China-ready software

• Why “Kingdee” is Right for you?

Opportunities and Risks ofDoing Business

in China

Opportunities and Risks ofDoing Business in China

• Many reasons to invest in China– CEPA– WTO– the de-facto World Factory– Inward direct investment: US$44bn (2001), US$51bn (2002), US$58bn (2003)– GDP per head grows 8.6% per year from 1992 to 2002– Olympics Game in China– World Expo in China– a 5.5km racetrack will open in Shanghai in 2004. “Formula One” in China soon!

• The REALITY is– most of the foreign investment in China are not making money– “More foreign firms will pile in, excited by the economic reforms triggered by membership of the WTO. Look

for foreign direct investment to approach US$60 billion in 2003. But the WTO and CEPA reforms will notbe fast.” - The Economist

• Three major aspects to be cautious of when we are heading to the North.– Business Practices– Cultural Differences– Choice of Application Software (main focus today)

• Lessons Learned:– Those who are ready for China can make the most out of China. The question is what is China-

ready?

How DifferentAre

the Application Software Requirementin China

fromthe Rest of the World ?

An Quote from Merial Asia“Managing regulatory requirement change”

• "We have to be careful that the financial software cancope with the regulatory requirement of differentcountries. The invoicing and printing in China, forexample, is different, so you have to understand thelocal business and regulatory requirements. And ifthe company in China reports back to this region,there is a corporate requirement for consolidation.Very often, there is a tendency to forget therequirement of the top level."

• - James Sua, Senior IS Director, Merial Asia. (joined owned by Merck & Co and Aventis)• - Source: MIS Asia - June 2003

Examples:Accounting and Finance

Applications Software

Uniqueness of China-Ready Softwaree.g. Accounting and Financial Systems

• Not only Chinese Language or UI but …• Accounting s/w needs to be first certified by PRC gov’t• New Accounting systems

– 3 mths parallel run; approved by PRC gov’t• Invoicing

– Invoices from PRC gov’t– VAT invoices must be printed out from dedicated PRC systems

• Reporting– Mthly bal sheet and income stmt– Annual cash flow

• Chart of Account– 1st level COA must be conformed with PRC

• Fiscal year– 12 mths in PRC; 13 mths in HK

4.The local finance4.The local financebureau assign auditor tobureau assign auditor todo onsite auditingdo onsite auditing

The Approval Procedures of the Computerized Accounting System in China

3.Apply for the3.Apply for thecomputerizedcomputerizedaccounting systemaccounting systemcertificatescertificates

1.1. Choose the Choose thegovernment certifiedgovernment certifiedaccounting softwareaccounting software

2.After system implementation,2.After system implementation,the manual and computerthe manual and computerfinance data must be kept for atfinance data must be kept for atleast 3 consistent accountingleast 3 consistent accountingperiodperiod

certificatescertificates

5.The certificates issued by5.The certificates issued bythe local finance bureau, andthe local finance bureau, andyou are authorized to useyou are authorized to usecomputerized accountingcomputerized accountingsystem to take the place ofsystem to take the place ofmanual accounting bookmanual accounting book

How about these applications?Are Yours China-Ready?• Human Resources• Inventory• Manufacturing• Distribution• Workflow• Customer Relationship Management• Supply Chain Management• More ….

Cases study

• SAP already deployed for Tier 1 holdingcompany

• The initial investment and maintenance costfor the SAP ERP system is expensive

• There will be a lengthy time frame for thewhole group companies deployment

• Opportunity and investment cost while waitingfor system to go live

Case #1 - A large Conglomerate

• Employed “Kingdee-SAP model” to achieveAccelerated deployment

• Achieved 70% pre-built, 20% customization forgroup and 10% for individual company aroundbusiness needs

• Predictable time frame, expenses and resourcerequirements

• Centralized and Manageable COA andFinancial Information from Group companies

Case #1 - A large Conglomerate…

PO DistributionInventory

Manufacturing

AP ARG/L

Costing

Branch companyERP

SAP ECCS SAP BW

EISHQ

Audit control Audit Control

SAP R/3

Group Control

Branch companyERP

PO DistributionInventory

Manufacturing

AP ARG/L

Costing

Branch companyERP

• In-house developed core application for the accounting,invoicing and logistics administration operations

• Align with the business expansion to China, the companycurrently has 10 offices totally in China

• Selected Kingdee K/3 to adopt a Chinese governmentcertified accounting system

• However, in order to preserve the data integrity and asingle input interface from user point of view, there is abusiness need for end-users to export the existingtransactions information into Kingdee K/3 modules forreporting and local requirements

Case #2 - A Fortune 100 High-tech company

• HQ in HK and more than 10 operationsoffices in China

• Used to deploy local accounting package• Lack of local support network in China and

needs customization for Chinese governmentregulation

• Opportunity and investment cost while waitingfor system to go live

Case #3 - A local HK company

We have helped these HK and Int’l customersget their applications China ready.

( )

More …

Overviewof

Application Software Marketin

China

Packaged Software Market in China

2002: 16.3 billion CAGR(2002-2007) : 25.8%

China-Made Softwareis Growing Rapidly

• 2005 Software Market in China– CAG = 40%– Total Size 25 Billion RMB where

• 15 Billion (i.e. 60% is made in China andonly 40% is foreign software)

• 3.8 billion exporting to the world

Selection Criteria ofChina-Ready Software

Selection Criteria forChina-Ready Software• Get you run into business fast and safe “Time to Market”• “Right” Functions and Features

– Chinese User Interface– Support local regulatory and government requirement– Support local business practices and requirement– Conform with both China and International standards and regulations– Seamlessly Integrate with your HQ systems

• Solutions Provider– Provide support in all major cities– Experience in both HK and PRC– Possess international experience and management– Get you connected with companies in China to expand your business opportunities– Good relationship with China Government

• Highest ROI– “Rich and Right” functionalities at reasonable price

• HR: Company and Personal Values– Easy to find employees, consultants and accountants to have the product

knowledge and skills– IT and MIS Manager can gain PRC management experience

Why Kingdeeis

“Right”for you?

Kingdee’s Market Leadership“In 2001, Kingdee became No 1. ERPvendor in China with a market shareof 15%” - Computer World 2001

“In 2002, Kingdee was No. 1 ERPvendor for SME in China with amarket share of 19.3%” - ComputerWorld 2002

Ranked #6 Application SoftwareVendor in China over SAP – IDG2002 (only 3 local applicationsoftware vendors are ranked withinTOP TEN)

In 1996, released thefirst accountingsoftware forWindows

In 1993, Robert Xuestablished Kingdee

In 1998, IDGinvested RMB 20Million in Kingdee

In 1999Released Kingdee2000 accountingsoftware and K/3ERP

On February15th 2001,listed on theGEM ofSEHK

Key Milestones

In 1998,passed ISO9001

8133

In Dec. 2001,Kingdee acquiredCase, No. 1 ERPvendor in 1999

Passed CMM3 in2002 & expectCMM4 in 2004

Kingdee ranked no.1 in ERP from theyear of 2000

Acquired 6.7 acreland in Shanghaidedicated foroutsourcing businessin 2003

Set up Asia/PacificHQ in Hong Kong

Revenue 59.5% and Net Profit: 39.5% increased comparing with 2001

Financial Highlights

National CoverageBranches: 46# of Staff: 2,400# of R&D Centres: 3# of Developers: 600Partners: 600

Kingdee is Receiving Full Support fromChina and HKSAR Government

• : • CEO: Mr Robert Xu

( )• : Mr Mike Rowse• : Mrs Betty Fung• : Mr Toa Charm

Our Mission - KingdeeBecome…

• NO. 1 enterpriseapplication softwareprovider in China in 2005

• One of the TOP TENapplication softwareproviders in the world

Introduction toKingdee Solutions Suite

Capital Market

Knowledge Market

Collaborative Supply

Collaborative Planning

Collaborative Design

SCM Market

Service

Sale

CRM

Investment Management Finance Management Strategic

Management

Value Management

PerformanceCollector Archives Management Search Engine

KM

Consum

erM

arketSu

pply

Mar

ket Accounting

Purchase

Financial Control

Manufacturing Distribution

Quality Control

Human Resources

Portal

ERPDRP

KMCRM

KingDee EAS (Enterprise Application Suite)

DRP

Application Server

DBEngine

Database SQL ORACLE DB2 SYBASE DOMINO

ERP

Business IntelligenceBusiness Intelligence

SecurityEngine

UNIXWindows

MS Windows Linux IBM AIX HP UX SUN Solaris

Mainframe

IBM OS400 IBM OS390

GlobalEngine Object

Comp.Model

BusinessRules

WorkFlow

MessageEngine

PortalEngine

IDE Config. Dev. platform

Wireless APIOffline API

Report and Print Tools

IDE Test Tools

Org. Structure Mgt.Basic Data Mgt.

Industries Plug-in ComponentsIndustries Plug-in Components

KMCRM

.NET J2EE

EASBAPI WEBSERVICE

Kingdee EAS Technology Infrastructure

• Modularization• Component based• Re-structurable• Scalability• ……

•• ModularizationModularization•• Component basedComponent based•• Re-structurableRe-structurable•• ScalabilityScalability•• …………

Logistics Mgf. F/A

M/A HR KM

CRM EIP ……

Kingdee EAS Feature-Modularization

ERPERPKMKM

DRPDRP

M/AM/A EIPEIP

HRHRCRMCRM

BIBI

Kingdee EAS Feature-Integration

GroupControlGroupControl

ERP

Financial packages

• 14 different modules• Accounting• Managerial accounting.• Financial Analysis…

• 14 different modules• Accounting• Managerial accounting.• Financial Analysis…

Logistics packages

•10 different modulesSales, purchasing,distribution,costingetc.

•10 different modulesSales, purchasing,distribution,costingetc.

Manufacturing packages

•3 different modules•BOM, Planning,Workshopmanagement,production Cost …

•3 different modules•BOM, Planning,Workshopmanagement,production Cost …

Leading Total managementsolution provider

Product interface

Product interface

Product interface

The Best Selling ERP Software in ChinaThe Best Selling ERP Software in China

Customer TierCustomer Tier Data TierData TierApplication Logic TierApplication Logic Tier

BrowserBrowserBrowser

WebServerAspJsp

WebServerWebServerAspAspJspJsp

Data Access and SaveData Access and SaveData Access and Save

EMAIL Service

EMAIL EMAIL ServiceService

DirectoryService

DirectoryDirectoryServiceService

RDBMSRDBMSRDBMS

………

RichCustomer

RichRichCustomerCustomer

Internet (TCP/IP, HTTP, HTML, XML)Internet (TCP/IP, HTTP, HTML, XML)

SwithinDevice

SwithinSwithinDeviceDevice

Fire Wall

Application Server

Application Application ServerServer

MessageServer

DataExchange

Server

MessageMessageServerServer

DataDataExchange Exchange

ServerServer

LanguagePackage

LanguageLanguagePackagePackage

Kingdee K/3 ERP Technology FrameworkKingdee K/3 ERP Technology Framework

Case Study: HK-China ApplicationKingdee K/3 installed in H K H Q and m ainland branches separately,and do the data synchronization every day by Kingdee IM TS (internetm essage transfer system )

InternetInternetFIREwALL

D atabase synchronization betweenHK HQ and mainland branches everyday

Server set up inHong Kong

FIREwALL

H ongkong M ainland

China

A full set ofaccounting systeminstalled in about 200local Chinesebranches

IMTS

CRM

CRM Application Feature

Dictionary DefinitionBusiness Self-Definition

Strong Authorization ControlReliabilityReliability

FlexibilityFlexibility

ScalabilityScalability

PerformancePerformance

KM

OADOC Center

OAWork flow

DocumentationRoutine modelData Interface

Smart Flow

OAKnowledge release

Enquiry

KINGDEE E-Portal

The second phase

DOC Center

Knowledge CenterFile and documentation

Press fileEnterprise operation file

ClassificationReclassification

security managementRelative information

Mirror image management

Knowledge discovery

The first phase

Collection Recycle

Clean up Release

OAKnowledge Management Solution

Knowledge share

Begin

Knowledge Management

DRP

DRP Application Feature

•Trans-platform application;

•Powerful scalability;

•Strong interface available;

•Strong and flexible enquiry system.

BI and BPM

BI/BPM Features

Market Share by Vertical

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Jan Feb Mar Apr May Jun Jul Aug Sep

High TechFinanceManufacturing

Customer Satisfaction vs. Competition

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15

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25

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35

Q1 Q2 Q3 Q4

CompanyOracleIBMSybase

Suspects vs Leads Target and Actual

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200

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600

Jan Feb Mar Apr May Jun Jul Aug Sept

ActualTarget

Budget vs Actual

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450

Jan Feb Mar Apr May Jun Jul Aug Sep

Competitor ChannelCompetitor ChannelBQD Gains MarketShareHSE Product Launch inChina disastrousBrio Revolutionizes BISolutions

Marketing NewsMarketing NewsNew Book by H.Christensen on WebMarketing

Product Mix by Bookings

PortalReportEnterpriseApplications

Customer Mix by Bookings

New F1000Installed Base F1000

Choose Settings: Total Bookings Total Units By Geography By Division

Decision Models: Campaigns Competitive Analysis Survey Information Customer Analysis Budgeting

Marketing MetricsMarketing Metrics

Weekly Leads: Target:

Market Share:Target:

Budget:Target:

Customer Satisfaction On Target

Marketing Goals:1. Measure Customer Satisfact.2. Exceed Weekly Leads Target3. Hit Market Share Goals4. Keep Allocated Budget

480426

+11%+8%

$349K$366K

If you want to getready for China,please talk to us!

Action Now!• Fill in your questionaire and get a free gift from Kingdee• Stop by our demo booth today• Attend our demo days on Nov 25 or Dec 9• Talk to us in person

• Phone: (852)-21579390• Email: asiapac@kingdee.com

4. Find out more from our international web site: http://www.kingdee.com.hk/