Digital transformation creates opportunities

Chinese enterprises are embracing homegrown software, cloud services amid rising concerns over information security

China's domestic software industry is on the cusp of a strategic opportunity, as local enterprises increasingly embrace homegrown cloud computing and software to accelerate digital transformation, experts said.

The comments came after the country's software sector recorded revenue of 3.86 trillion yuan ($542.8 billion) in the first seven months of this year, marking a 15.1 percent jump year-on-year.

Wang Wenjing, chairman of Chinese software major Yonyou Network Technology Co Ltd, said:"The enterprise software market is facing huge historical opportunities amid the current trend of digitalization, localization and globalization."

According to him, homegrown software and cloud service providers are now at the forefront of the world in terms of innovative products and services for next-generation technologies.

"As local companies consider shifting to cloud services to accelerate digitalization and achieve industrial upgrades, they also increasingly embrace domestic platforms over foreign ones amid concerns over information security,"Wang said.

The securities company CSC Financial Co Ltd said in a research note that Chinese tech companies are increasingly joining hands to promote the application of domestic software.

In January, Yonyou initiated an alliance for using homegrown, controllable IT products in enterprises' digitalization efforts by partnering with the China Software Industry Association. More than 10 companies, including cybersecurity solutions provider 360 Security Technology Inc, are founding members of the alliance.

In comparison, US tech giant Oracle announced plans to lay off employees in its China research and development center earlier this year.

Currently, information security is of the utmost importance to enterprises. Enterprise resource management is the core system for managing the production and operation of enterprises and its safety and reliability is highly valued, CSC Financial Co Ltd said.

The speed of adopting homegrown software technologies is accelerating in China, CSC Financial Co Ltd said, especially as domestic companies are now stepping up their push to develop cloud solutions.

Wang from Yonyou said moving business to the cloud is an important way for companies to push forward digital transformation. Yonyou will build a cloud-based application platform where companies can access different software to meet their specific needs.

Founded by Wang in 1988, Yonyou is best known for its accounting software in China, where the Beijing-based company accounted for 24.6 percent of the local market last year. Later, its business expanded to more management software products, including enterprise resource planning.

In the first half of this year, Shanghai-listed Yonyou recorded about 3.3 billion yuan in revenue, up 10.2 percent year-on-year. Specifically, its cloud service revenue surged 114.6 percent year-on-year.

As a leading software company in China, Yonyou has great advantages in enterprise application services."We have a professional track record, a big customer base, sales channels, talented staff with ability and experience, and our brand,"Wang said.

Currently, more than 2.7 million enterprises and government agencies in China are using the company's software. More than 4 million enterprises have registered on its cloud service platform as clients, with 290,000 of them being paid clients, Yonyou said.

"We aim to serve more than 10 million clients with cloud services in the future," Wang added.

Yonyou is just one of a growing number of Chinese software companies that are working hard to beef up research and development capabilities, in the hope of gaining an edge amid fierce competition.

From January to July, the growth of China's software industry hit 15.1 percent, 0.3 percentage point faster than a year ago, despite the challenges it faces from current China-US trade frictions, according to data from the Ministry of Industry and Information Technology, the country's top industry regulator.

The relatively stable performance came as the ministry rolled out favorable policies to encourage enterprises to embrace cloud services. The ministry said it planned to encourage about another 1 million enterprises, especially those in manufacturing and other industrial sectors, to move their businesses to the cloud by 2020.

The strong push also sets increasing demand for domestic security software and cloud solutions.

Zuo Yingnan, vice-president of Chinese cybersecurity company Qi An Xin Group, said Chinese companies are scrambling to embrace the industrial internet and cloud to upgrade their businesses, and more efforts are needed to ensure the security of industrial computers and data.

"The industrial internet has accelerated the long-predicted convergence of IT technologies and manufacturing, as companies step up efforts to embrace digitalization,"Zuo said in an earlier interview with China Daily.

The industrial internet refers to a network of combined, advanced machines with internet-connected sensors and big-data analytics, which is of great significance to boosting the productivity, efficiency and reliability of industrial production.

"But it also brings new cybersecurity challenges, which mainly come from two aspects - how to better protect industrial computers and servers, and how to secure industrial data as they flow across different platforms," Zuo added.

Qi An Xin was founded in 2014 by former employees of 360 Security Technology Inc, but in April, the former became an independent company, with 360 selling all of its stake.

According to Zuo, industrial computers, specifically industrial control computers and servers, connect the information infrastructure of enterprises and industrial control equipment. But these industrial computers tend to have a long working cycle, powered with old operating systems and hardware, resulting in a lot of security loopholes.

"How to fix these loopholes without interrupting industrial production is a big challenge. Unlike consumer applications, which can be updated whenever security loopholes are identified, industrial apps and computers have to follow a certain schedule to perform. Casually fixing or updating them will interrupt production and lead to big losses," Zuo added.

According to Zuo, years of knowledge about local industrial production procedures and manufacturing know-how is needed to offer cybersecurity services to industrial companies.

Also, industrial data flowing across different applications has become a trend. There is an urgent need to ensure that the full-cycle data flow is protected and Qi An Xin has advantages in solving the two challenges, Zuo said.

Qi An Xin announced in May that it had inked a strategic partnership with the State-owned China Electronics Corp, to further expand market presence.

Under the partnership China Electronics Corp has spent 3.73 billion yuan buying a 22.59 percent stake in Qi An Xin, becoming its second-largest shareholder.

Under the deal, the two sides will cooperate in technological innovation, resource integration and the construction of major projects, with rising concern for network security calling for deeper cooperation between governments, enterprises and institutes.

"The strategic opportunity for domestic security software and solutions has come," Zuo added.

masi@chinadaily.com.cn

(China Daily Global 09/18/2019 page9)