BIZCHINA / Center
IBM, Kingdee to seal global software tie
(Reuters)
Updated: 2007-06-04 16:52
IBM and Lehman Brothers have agreed to pay nearly US$17 million for 7.7
percent of Kingdee International Software Group Ltd., aiming to establish
an alliance under which Big Blue will help the Chinese software firm
re-design its products and expand globally.
Kingdee -- which sells software to help businesses run more efficiently
-- said on Monday the partners would begin cooperating on sales within
China initially, before expanding that distribution tie-up
internationally.
IBM -- which will get 3.85 percent of Kingdee by paying nearly half what
its shares were last traded at -- intends to help the Chinese firm by
"re-engineering" its products to better suit a global market, according
to a statement.
The U.S. firm will also gain access to Kingdee's domestic sales channels.
The deal "will raise the company's profile in the industry and in the
professional investor community," Kingdee said.
IBM and Lehman have agreed to pay HK$132 million (US$16.9 million), or
HK$3.7885 per share.
China's nascent software market is projected to gallop ahead by about 10
percent annually and account for almost a quarter of Asian IT spending of
$48.37 billion by 2010, excluding Japan, according to IT consultancy IDC,
as corporations and government offices overhaul operations.
But the country now hosts hundreds of homegrown software companies, most
of them small and unheard-of outside local markets.
SAP's chief operating officer told Reuters last year he believed a
Chinese software maker could emerge in coming years as a more serious
threat than even Oracle.
Kingdee, which SAP regards as its closest competitor within the world's
fourth-largest economy, hopes to ride persistent growth at home while
making forays into Southeast Asia and other overseas markets such as
India or the Middle East.
Related readings:
Software industry posts 28% growth in Jan-Apr period
Software industry sales to hit 1.1 trillion yuan
Huawei, ZTE and Haier rank top 3 for software income
China's software industry 'will stun the world'
It hopes to expand revenue 30 percent a year till 2010 and post at least
a quarter of sales from abroad by then, versus about 5 percent now,
executives have told Reuters.
Shenzhen-based Kingdee expects to nearly double overseas revenue annually
over the next four years. To get there, it plans to start small in
markets such as Singapore, Malaysia and Indonesia -- now fragmented and
housing no single dominant player -- before marketing its services in
more mature arenas of Australia, South Korea and Japan.
(For more biz stories, please visit Industry Updates)
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