B2B Giants Enter China
Interfax Daily News
March 30, 2001
The global rivalry between global B2B titans Commerce One and Ariba spilled tentatively into the Mainland China market with both parties announcing Beijing tie-ups to complement earlier forays via southern routes into China. Commerce One announced to Interfax that it has entered a partnership with ChinaEB in addition to its participation in Singapore-based SESAMi.com. Ariba's B2B platform launch with Sparkice follows its recent tie-up with Pacific Century CyberWorks.
The size of investments have not been made public, but Commerce One corporate communications director Emile Lee told Interfax the initial equity invested was minimal. "These sorts of deals are very common in the B2B industry. They are exploratory ventures that enable the foreign companies to learn more about the PRC market," noted one observer playing down the significance the announcements.
Both US-based companies have reportedly encountered difficulty in outlining strategies and gaining Mainland partnership footholds in China's sensitive B2B sector, a point suggested by the contrasting nature of the two companies' respective deals and their limited investment. Commerce One looks to a broad relationship with ChinaEB that will focus on the partnership providing consulting services and handling projects, particularly the construction of private marketplaces and backend solutions, a Commerce One strength given its tie-up with SAP. "Our goal is to go out and help businesses build platforms," said Lee, who also mentioned that the company will establish a wholly foreign owned enterprise in the Mainland.
Ariba's partnership, by contrast, focuses on a project - the provision of a solution for the Sparkice trading platform. CEO Kevin Krach referred to Sparkice as its "first customer in China," suggesting non-exclusivity.
Commerce One chose a Mainland partner with strong government backing. ChinaEB boasts investment from both the Research and Development Center under the State Council and Beijing Telecom. Critics refer to ChinaEB a "paper company." Ariba's partner Sparkice, by contrast, is a more commercial player. Although government backing can still be an important ingredient for success in the China market, observers note that the advantages it can bring are often overstated, suggesting that, while questions remain about Sparkice's ability to execute, Ariba may have landed the better deal.
"To succeed in China's B2B industry, the key is not having the latest technology nor government backing, but rather execution. Firms must convince customers that they will realize real economic benefits by adopting the solutions," says Buddy Ye, CEO of Mainland reverse-auction specialist ECantata.com.
Porter Erisman, director of corporate communications for Business- to-Business maketplace Alibaba, argues that many Chinese companies are at a stage in their development where they can benefit from increased efficiency through upgrades in their internal technology systems, but that most are not prepared to jump onto the transactions bandwagon, a potentially costly move that could mean a loss of independence. "Transactions," Erisman stressed, "are just a commodity service."
Copyright Interfax
asia-links.com |
