2. 2matrix PARTNERS CHINA | 2015
Great enterprise sector opportunities in China
Consumer
Market
Enterprise
Market
total pop (U.S. + Europe) ~1.1bn total pop ~1.3bn
market cap ~ $ 900bn market cap ~2000bn RMB
# of enterprise ~20 mn2# of enterprise ~25 mn1
market cap~$ 300bn
Source：1 U.S. Small Business Administration, Small Business Profiles for States and Territories
2 State Administration for Industry and Commerce of the People's Republic of China
3. 3matrix PARTNERS CHINA | 2015
Why changes are taking place
Labor cost keeps ramping up1 High mobile penetration2
Lower cost and better users experience from SaaS model3
56+12%
2014
29
2008
thousand RMB
Average salary of workers per year1
2008 2014
90%
1%
Smart phone penetration in China2
Source：1 National Bureau of Statistics of the People's Republic of China
2 Gartner
• Lower price to new users, deployment cost 1/10 against legacy software
• Service providers pay more attention to user experience to prevent themselves
from high churn rate
• Big companies are embracing the cloud service more openly than ever before
4. 4matrix PARTNERS CHINA | 2015
Legacy software players stuck in stagnation
56.6
5.6
20142008
YoY growth rate of revenue ~50%, US
cloud companies
bn USD
1
2 Leading players are running robustly
Legacy software suppliers are undergoing
stagnation
4.44.44.2
2012 20142013
bn RMB
Yonyou (aka 用友)
7.87.56.9
2013 20142012
bn RMB
Neusoft (aka 东软)
revenue mkt cap
revenue mkt cap
40bn
RMB
20bn
RMB
mkt cap
ann. rev
GAGR
~48bn USD
~4bn USD
~40%
~15bn USD
~1bn USD
~70%
Source：Market size IDC, 2014. Yahoo Finance
5. 5matrix PARTNERS CHINA | 2015
Yet lack of native players in most of verticals…
eg. Human Resource
Recruiting Core HR Performance E-learning
others
~2bn USD
~15bn USD
~10bn USD
~3.5bn USD
~1.5bn USD
Source：public press
6. 6matrix PARTNERS CHINA | 2015
New trends in enterprise sector recent 2 years
More startups and More money ~10 companies with bn RMB+ valuation
2012
2015
1 over bn RMB valuation
8over bn RMB valuation
2018
Source：IT juzi
480
350
20142012
+17%
312
96
20142012
+80%
# of new startups in ent sector in China
# of investment activities in ent sector
