SAP to Double China Workforce, Accelerate Spending by 2015

By Bloomberg News - Nov 15, 2011 5:34 PM GMT+0700

SAP AG (SAP), the world’s largest maker of business-management software, plans to almost double its workforce in China and invest $2 billion in the country by 2015 to increase revenue as the economy expands.

SAP will hire 2,000 people, adding to a payroll of about 2,500 employees in the country, and double the number of offices from the current five, the company said today in Beijing at its Sapphire conference for partners and customers in China. Investments will focus on sales-force training and developing software that can be exported to other countries.

SAP’s investment is part of the Walldorf, Germany-based company’s plan to expand emerging markets’ share of revenue as it targets a 60 percent increase in global sales by 2015. China’s government announced tax and financing measures in October aimed at helping small companies, citing their role in innovation and job creation. SAP’s Business One software for small and medium-sized companies is developed in China.

“With that product, we can adopt very quickly in China because it’s developed here by Chinese people,” Hasso Plattner, SAP co-founder and chairman of the supervisory board, said in an interview in Beijing today. “China is moving so fast,” he said. “We made the promise that we will take extra care of this market, extra investment but also extra engagement with the customers.”

SAP fell 0.5 percent to 43.82 euros at 11:30 a.m. in Frankfurt trading. The stock has risen 15 percent this year compared with a 3.2 percent gain for competitor Oracle Corp. (ORCL)

China Growth

There are 14 new Business One customers in China every day on average, Plattner said. SAP has about 4,000 customers in China, of which about 2,000 are Business One clients. The company has in excess of 170,000 customers in more than 120 countries.

SAP considers China the most important market for its wider Asia-Pacific strategy as it sees “extremely large companies and an extremely large number of them,” Chief Technology Officer Vishal Sikka said in the same interview.

The company’s Hana data-analysis software was first deployed in China in September and has generated “very positive” feedback from customers including soft drinks maker Nongfu Spring Co, according to Sikka.

“China is a very significant market for SAP,” Thomas Otter, vice president at Gartner Inc., said by phone from Heidelberg, Germany. Newer products such as mobile applications and Business ByDesign, which customers can access over the Internet rather than installing on their computers, “will be key for SAP’s long-term growth in those markets.”

ByDesign Distribution

SAP is aiming for 20 billion euros ($27 billion) in annual sales by 2015, compared with 12.5 billion euros in 2010. The Asia-Pacific region, excluding Japan, generates about 11 percent of yearly sales. SAP doesn’t publish a country-by-country breakdown of revenue.

SAP agreed in May to let China Telecommunications Corp. market and distribute ByDesign to small and mid-sized enterprises.

The German company’s spending in China will total $2 billion from 2012 to 2015, representing an additional investment of “hundreds of millions of dollars,” said Hubertus Kuelps, an SAP spokesman, declining to specify earlier figures.

-- Ragnhild Kjetland, Penny Peng. Editors: Tom Lavell, Robert Valpuesta

To contact the reporters on this story: Ragnhild Kjetland in Frankfurt at rkjetland@bloomberg.net; Penny Peng in Beijing at ppeng18@bloomberg.net

To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net