Emerging Companies Drive Cloud Adoption In China

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SHANGHAI—In China, where GDP is growing at more than twice the rate of the United States (6.8% vs. 3.3% in the third quarter of 2017), the debate has shifted from “if” cloud computing is the right technology choice to how best to do it. And the new and growing companies driving China’s economy are acting a lot like up-and-coming companies elsewhere—they’re adopting cloud applications for everything from sales and marketing to enterprise resource planning.

John P. Foley

Oracle CloudWorld, a one-day event in Shanghai in November that drew 4,000 people, featured many up-and-coming companies.

“I call them emergent private enterprises,” says Roger Li, managing director of Oracle’s business in China. “They grow very fast. And the general profile is they believe in cloud.”

That’s a change from a few years ago when companies in China were evaluating the potential benefits of cloud services for the first time. “Now there’s no debate,” says Li.

For Oracle, which employs more than 5,000 people in China and has had a presence in the country for nearly 30 years, that’s meant growing uptake of its cloud services. Emerging “fast adopter” companies now account for more than 70% of Oracle’s software-as-a-service business in China, Li says.

Many of these new-style companies were in attendance at Oracle CloudWorld, a one-day event in Shanghai in November that drew 4,000 people and an online audience of 2 million. They included Mobike, a popular bike-sharing service that is using Oracle ERP Cloud and Oracle HCM Cloud, and Baheal Pharmaceutical Group, an investment and healthcare operations company that is implementing Oracle Marketing Cloud and Oracle NetSuite’s ERP cloud services.

Banks, telecom companies, and other established organizations, often operated by the Chinese government or affiliated with it, are more likely to go with a hybrid cloud model that relies on core on-premises systems that are connected to SaaS services for “edge applications,” Li says.

Oracle’s Cloud at Customer offerings, which let organizations deploy Oracle Cloud services within their own data centers, are popular among those that prefer a hybrid cloud, Li says. For example, BYD, a manufacturer of electric cars and rechargeable batteries, is using Oracle platform cloud services from within its own facilities.

What’s happening in China reflects the broader trend of digital transformation underway at companies of all sizes and types around the world, said Chris Morris, vice president with IDC’s Asia-Pacific Group speaking at Oracle CloudWorld. New business models, including companies built “on top” of cloud services, are part of a transition to what IDC refers to as Cloud 2.0, where solutions are more important than raw infrastructure. IDC forecasts the SaaS market in China will more than triple over the next four years, from an estimated $1.1 billion in 2017 to $3.5 billion in 2021.

Baheal Pharmaceutical Group is driving digital transformation in healthcare. Baheal is branching from its roots in drug distribution to offer marketing and information services to thousands of pharmacies and hospitals in China. “We’re among the forerunners in moving everything to the cloud in the healthcare industry,” said Fu Gang, the company’s chairman, during a keynote presentation at Oracle CloudWorld.

Oracle competes with two types of cloud service providers in China, Li says: global providers, including Amazon and Microsoft, and local companies such as Huawei, Aliyun, and Kingdee. In both areas, Oracle competes on the quality and completeness of its cloud offerings, its know-how in enterprise technology, and its long list of partners, including Tencent, a technology powerhouse well known for its widely used WeChat mobile messaging application.

“Our play is we have deep experience in the enterprise market,” Li says, which is important to emerging Chinese companies looking for scale and reliability as they expand.

One of Oracle’s advantages in China, as in other countries, is that it offers top-to-bottom cloud services, from software as a service to platform and infrastructure as a service. This full stack approach is more comprehensive than specialists offering just IaaS, says Li.

John Foley is director of strategic communications for Oracle.

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