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Oracle Ups Bet in High-stakes China Market
Software giant Oracle Corp is staking a bigger bet on China by stepping up investments in development and courting application developers in the country to capitalize on China's growing needs for business software.

The world's No 2 software maker announced last week that it would kick off within a few months its second development center in China geared towards developing products especially for the Chinese Government and public sector.

The proposed Beijing-based centre comes on the heels of the formal opening on June 1 of Oracle's first center in Shenzhen, which has about 100 engineers focusing on the localization of its software products.

"We are hiring a number of talented engineers and training a Chinese team for both developing (Oracle) technologies and distributing technologies to the Chinese market," said Larry Ellison, chairman and chief executive officer of Oracle Corp.

The new centre is likely to be located in the capital city's software hub, Beijing Zhongguancun Software Park, whose developer has been negotiating with Oracle in hopes of convincing the software giant to settle down there.

"Our investments (in China) will be proportional to the growth of our business in China," the chairman said at OracleWorld Beijing, a conference organized by the company to promote its database and e-business software in China.

"The Chinese economy has been growing at a 7 percent rate and has become the engine for Asia," Ellison said. "We are moving to keep up with China's rapid growth."

The company claimed that its business has been growing at an annual rate of 50 percent, but refused to disclose specific revenue figures.

In another move to fuel its expansion in China, Oracle last Tuesday launched a Chinese version of Oracle Technology Network (OTN), its popular online resource centre for the Chinese open-standard developer community that offers developer-to-developer information sharing in the Chinese language.

Developers in the country will be able to access free downloads of Oracle development tools and software, online documentation, support services, education services, technical papers, discussion forums and sample codes on the new website.

By offering local-language support, the company hopes to access China's pool of high-skilled developers.

The OTN currently has 2.4 million members worldwide.

The English version, since its launch in 1998, has attracted 55,000 users from China, said Rene Bonvanie, vice-president of Oracle9i marketing and OTN.

"It's a natural evolution to extend these resources to developers throughout the world, particularly in a fast growing development community like China that is primed to take advantage of the latest in development skills and technology expertise to grow its own economy and expand its reach internationally," he said.

Bonvanie expects to register another 165,000 OTN members in China over the coming few months.

China is the third largest market for Oracle in Asia after Japan and Korea and the fastest growing one in the world, Ellison said.

"There's a chance we can become not only the largest technology supplier in China but also the No 1 business application company in China," he said.

China's growing role

The three-day OracleWorld Beijing conference has attracted more than 6,000 attendees from China and around the Asia-Pacific region despite the growing mania for the ongoing World Cup football matches.

"It makes sense that we put OracleWorld in Beijing," Ellison said.

Though he declined to reveal the amount Oracle's spent on the grand gala, industry observers estimated it at between US$4 million to US$5 million.

Considering the decline in IT spending amid the current tech slump, that spree accentuates the increasing importance Oracle has put on the rapidly growing China market.

"The lack of legacy applications and technologies allows China to move with the latest and greatest stuff," said Ellison at a news conference.

About 150 big-ticket Chinese companies use Oracle e-business Suite, including China Mobile, Bao Steel Group, Hua Wei, the Industrial and Commercial Bank of China and China Airlines. The Bank of China, China Telecom, Shanghai Power and Xinhua News Agency are among its database customers, the company said.

Oracle's increasing focus on China has raised the eyebrows of jittery Indian info-tech executives who fear China will lure away business and overtake or even outstrip India in the software sector as Oracle has a big software business in India.

The company currently has a development centre in India which works on a range of products, from databases and development tools to Web technologies and e-business applications.

The company also has a global consulting group in Bangalore, India's software hub, and global product support centres in Bangalore and Hyderabad, an emerging technology hub.

In March, news of the opening of Oracle's Shenzhen shop triggered media rumours that the software giant would move its development centre out of India to China.

Oracle later had to issue a statement denying the shift and reaffirming its commitment to India.

At last Wednesday's news conference, the same question was raised again.

Asked by Indian reporters which (China or India) Oracle preferred, Ellison tried to ease anxieties, answering, "I have a daughter and a son. It is like my daughter asking: 'Do you like me more?' My answer is I love both."

However, announcements of establishing two centres in China within a period of just four months and the launch of Oracle's Chinese language OTN suggest the software giant is putting China at the very front of its global business strategy.

"The biggest risk (for Oracle) is: not investing in China," Ellison emphasized. "That is not a mistake we are going to make."

(China Daily June 26, 2002)

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