A New Era: How eProcurement is Helping Chinese Companies Replace Traditional Business Models

By Guest Editor

April 20, 2017 at 3:25 PM

By Mary Chen, GEP

It’s frequently said that the past two decades have been the golden age of internet technology development in China; the country has successfully set up a national internet architecture spanning across provinces. At the same time, China’s leading internet companies have been continuously increasing their investment in the development of new internet technologies such as cloud computing, big data and artificial intelligence. To meet all kinds of popular and individualized demand across different industries and fields, many small and medium entrepreneurial companies have also launched various new internet-based platform products. Traditional business operating models are gradually being replaced by new ways of working based on the internet.

The Chinese enterprise SaaS market has been booming since 2015. From 2016 to 2017, the market kept its strong momentum of expansion. Data shows that in 2016, the Chinese enterprise cloud service market size exceeded 50 billion yuan (around $7.3 billion), and in the next few years will remain at about a 30% annual growth rate. And in 2017, we expect China's SaaS services market scale will pass the 10 billion-yuan mark (around $1.5 billion). Based on the features of SaaS mode, for numerous small and medium-sized enterprises, it is beyond doubt that SaaS is the most direct way to save costs, as well as driving operational efficiency and effectiveness. Some of the advantages that companies can avail themselves of include very low deployment costs, ready-to-use procurement tools, shared supplier resources, and transparent data and reports.

Because of the high-speed development of information technology and internet in China, and integration of electronic procurement, electronic bidding tools have developed significantly over the past few years. China’s government has also introduced policies to encourage the introduction of e-sourcing in the procurement bidding process before June 30, 2017. The “2017 Peak BBS for China Public Purchasing Trend” conference was held at the end of 2016 in China. Procurement leaders from countrywide leading state-owned and private enterprises held discussions on various new trends in procurement. Two of the hottest topics were “The digitization of end-to-end procurement processes and e-commerce transformation” and “Big data and standardization of public procurement.” These leading state-owned and private enterprises are now embarking on or have launched their "Internet +" procurement platform internally.

Domestically in China, more than 500 local companies provide applications based on Internet procurement platforms, mainly starting from E-Auction, expanding to end-to-end procurement with different models, such as demand planning, procurement project management, contract management, P2P, supplier management, spend management, procurement catalogue, etc.  These applications also allow further integration with Enterprise Office Automation, Enterprise Resource Planning, and other financial systems. A leading Chinese domestic eProcurement solution provider has released the latest version of end-to-end procurement SaaS platform, which is now attracting much interest from many state-owned and private manufacturing enterprises.

With more than ten-years of experience of procurement system development, another major company in China has already begun collaboration with the Chinese Academy of International Trade and Economic Cooperation (CAITEC) and jointly launched a China core suppliers e-library. They have used real online trading transactions to build online credit management systems for high quality suppliers. This system performs a comprehensive evaluation on the online credit level and capabilities for each registered supplier, based on their qualifications, online trading situation and user feedback. It gives enterprises a new option to identify, evaluate and select suppliers in a more timely and efficient manner.

In recent years, some Chinese leading e-commerce enterprises also developed their own enterprise "Internet +" procurement platform to serve large state-owned, private and even some foreign companies. This has resulted in the healthy development of the public procurement market in China. Thus, some global leading eProcurement companies including Ariba and IBM Emptoris are also strengthening their investments to deepen their footprint in China.

The vigorous development of China's "Internet +" procurement software has brought new opportunities and challenges to procurement leaders in China. Exactly how to utilize the advantages of these "Internet +" procurement software systems, and help their enterprises to realize the maximum benefits of procurement, will become more and more important to China’s procurement leaders.

Author:

Mary Chen sm.jpgMary Chen is a procurement practitioner with 12 years diverse experiences in consulting, strategic sourcing and supplier management across different industries. She now serves as a senior manager of consulting service based out of GEP Shanghai office. Prior to joining GEP, Mary was a global sourcing manager for a large pharmaceutical company. She has also held various procurement roles in IBM. Mary holds a B.S.Ec major in Econometrics and a B.L major in Journalism and is both CPSM and PMP certified.

 



Tags: esourcing eProcurement enterprise SaaS electronic procurement electronic bidding
Category: News Article

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