The fifteen-year-old Beijing-based company has grown remarkably over the last half decade, despite the burst of the dotcom bubble, going up in a market where others have gone down. At a time when the IT industry saw massive lay-offs in 2001, UFSoft was hiring. Then, in May 2001 the company listed on the Shanghai stock exchange and is now the largest vendor of software for ERP in China, serving 300,000 customers with 4,000 employees on sales last year of US$70 million.

UFSoft's success stems from specific components. “We can tap into a pool of 2.8 million Chinese graduates,” said UFSoft chairman Wang Wenjing in June at a Shanghai technology conference. “We have a strong domestic market of ten million SMEs, 80 million internet users and 290 million mobile phone users.”

Together with Kingdee, Kingsoft, and Chinasoft, UFSoft has been conquering the domestic market, while the international players look on enviously. Government departments' preference for domestic players and the language barrier, which effectively requires applications to have a Chinese user face, have helped UFSoft's growth. UFSoft counts multinationals such as Coca-Cola, BMW, NEC and Sony as its clients, as well as Chinese corporate giants like Cosco, ICBC, Haier and China National Offshore Oil Company.

What the future holds

UFSoft is now looking overseas, targeting both companies that want to outsource their software development in China as well as foreign markets. Earlier this year, for example, UFSoft forged an alliance with Japan's leading IT supplier Fujitsu, one of Japan's leading IT suppliers, through which it expects to break into the Japanese market. The previous year, UFSoft established a similar cooperation with Microsoft, but on a more practical level, joining forces to make its Chinese IT applications more compatible with Window's products. That mainly technical cooperation gives UFSoft a strong competitive edge domestically.

Although accounting software is still one the key pillars of this rapidly expanding software vendor, UFSoft is now focusing on developing ERP systems, with especial focus on the retail, auto parts and print industries.

China: mobile and online technology

Wang expects China's software development to take a rather different direction compared with the rest of the world. “In the past, China has been copying the US market too much,” says Wang. “ERP solutions are still very much at an early phase, creating a huge potential domestic market that can become an ideal stepping stone for selling application software internationally.”

Because of China's heavy reliance on mobile phones instead of PCs – compared to, for example, the European or the US markets – Wang expects China and his company to focus more on the development of mobile IT applications. “We are changing our strategy, and will target more mobile applications,” says Wang. “In China, most companies and households still do not have a PC, making the mobile phone the first choice of many Chinese to access information.”

In addition, UFSoft is focusing on a second feature of the Chinese IT market that makes it very distinct from other markets: the surge in popularity of online games. Says Wang: “The most profitable vendors are those who sell online games. They will increasingly add services to their games, both online and offline.”

China's ERP services are still in the very early stage of deployment. Only 2% of SAP's world-wide revenues originate from China. UFSoft has increased its stake in the Shanghai Software Development Centre and is thinking of similar investments in Dalian, Xi'an and elsewhere. UFSoft CEO Shao Kai told a press conference in Tokyo at the end of May: “Software development in China is only in a very early stage.” As the technology progresses, UFSoft is one company to watch.