Digital China Gets Busy: Joint Ventures, SaaS, ERP

Posted on November 12, 2007
Filed Under China Business, China Distribution, SaaS |

China Tech News reports on Digital China’s (DC) new joint ventures:

The JV in Heilongjiang was set up between Digital China and Harbin Science & Technology Developing Company, one of the largest IT companies in Heilongjiang Province. The one in Anhui was formed between Digital China and Anlian, a major computer provider in Anhui Province.

The article (from last week) implies that the joint ventures are for DC’s ERP (enterprise resource management) solution. DC expanded its ERP solution in 2002, via a joint venture with Taiwan’s Data Systems. Data Systems claims that they provided the software and DC the market, but there’s no evidence either way. Data Systems recently was merged with Whitesun’s Taiwanese subsidiary. The joint venture with DC still seems to be in place, but DC doesn’t have much to say about it.

I’ve always thought of DC as primarily a distribution company with some services and a few software solutions. However, they have been diligently building their software business for ten years and are pursuing the small and medium business (SMB) market. ERP for that market (over four million SMBs) has long been a profitable business that is still waiting to happen.

Whatever the situation is with Data Systems, the deals in Heilongjiang and Anhui will help put more sales boots on the ground for DC. China is much too big to build a national sales network for one or a few software solutions. The joint ventures, at about RMB10 million each, give access to local sales and support networks and ultimately to sales staff’s customers. It’s cheaper and faster than doing it themselves. The article notes that DC has already set up offices and branches in thirty Chinese cities.

DC also has a joint venture with Softbank (who recently purchased a chunk of DC when it went private) to provide software-as-a-service (SaaS). It includes an ERP solution. It’s not clear (the google translate only goes so far) if the SaaS solution is the same as the client-server solution DC is selling through its other joint venture.

With Guo Wei (DC’s CEO) given his own slice of the pie in the buyout and with the backing of Softbank, DC looks like they’re gearing up for a very aggressive 2008.