It's never been as challenging for global companies in China as it is right now. First, we've seen a continuous stream of news about the Chinese government requiring greater regulatory governance, starting with the cybersecurity vetting of IT products that relate to national security and public interests in May. Second, leading Chinese Internet companies equipped with emerging technology, such as Alibaba, Baidu, and Tencent, are engaging consumers with enriched products and services, expanding into the enterprise business via innovative business models, and extending their reach from tier-one and tier-two cities to tier-three to tier-six ones.
To gain extensive geographic and vertical coverage in the huge market that is China, vendors have had to engage with partner ecosystems for business operations. Now, it’s even more critical for multinational corporations to enable their local alliances to overcome these disruptions and achieve mutually beneficial strategic business growth. Some vendors have already started doing so, with IBM being a leading example. Its initiatives include:
- Launching a strategic partnership with Yonyou. On September 13, 2014, IBM announced the start of its strategic cooperation with Yonyou during the latter's 2014 user conference. IBM will optimize DB2 with BLU Acceleration for various Yonyou products, such as NC (Yonyou’s ERP offering) and its supply chain management, customer relationship management, and human resources management products. In return, Yonyou will offer NC on top of DB2 with BLU acceleration to its customers, based on its evaluation of IBM’s product in June 2013.
In addition to this cooperation at the product-selling level, IBM and Yonyou plan to develop an ecosystem covering the end-to-end application life cycle, including marketing engagement, sales support, application testing, and technical support. Yonyou has also decided to integrate IBM analytics software, such as Cognos, into its Unified Application Platform (UAP), which covers development, integration, analytics, and private cloud management. Although the road map for Cognos and Business Quotient (Yonyou’s original analytics platform) is still unclear, it will become an important option for large enterprises if the vendors can seamlessly integrate it into the platform.
- Turning competitor Inspur into a competitive partnership.Inspur is one of the leading vendors of software, hardware, and services covering all major industries, such as government, education, healthcare, and banking and financial services. After the Chinese government announced the vetting policy in May, Inspur launched an aggressive marketing campaign named “i2i” — "IBM to Inspur" — with the aim of replacing IBM’s server business with its high-end TS K1 systems. IBM countered with two smart moves in August to turn its competitor into a strategic partner.
First, Inspur announced that it will offer IBM’s DB2 and WebSphere Application Server software on Inspur’s TS K1 systems. This will not only enable Inspur to provide infrastructure and middleware support for mission-critical applications, but it will also help IBM further strengthen its market share of both software and services (which have better margins than hardware) in large enterprises. Second, IBM will also collaborate with Inspur on developing new Inspur hardware systems using IBM’s Power server chips. This is important for IBM, following its exit from the low-end server market in January 2014 when it sold its x86 server business to Chinese PC manufacturer Lenovo.
To grow your business in China's highly regulated yet disruptive market, global players must get even smarter. Trying to make money while tackling your competitors alone is far more difficult than exploring the huge opportunities in China and sharing the fruits of your labor with your partners. Have you seen similar challenges in your business in the Chinese market? What partnership have you recently built up? Share your stories with me and my readers in the comments below.