China’s software and IT industry is booming. According to market researcher Ibis World, between 2010 and 2015 the sector has been averaging year-on-year growth of a whopping 21.4%. However, the boom has not resulted in a spectacular series of overseas expansions. In 2015, only 21 Chinese companies decided to expand abroad, according to data from greenfield investment monitor fDi Markets. In comparison, India, another fast-growing software market, reported 54 companies announcing foreign ventures across the 12 months.
One of the exceptions to Chinese tech’s limited showing on an international stage is Beijing-based Kingsoft. According to fDi Markets, Kingsoft is one of the top Chinese overseas investors in the sector, launching projects in the US, Brazil and Indonesia in the past two years.
“Kingsoft has been around for nearly three decades, but four years ago the management of the company decided to look into the international market,” says William Wong, the company's Silicon Valley-based vice-president of business development. “There are a lot of software companies in China that would like to expand, but in my opinion the biggest issue for them is finding a team that will understand the new market. That was also an issue for Kingsoft, and finding the right team took many months as well as setting an expectation for success.”
Challenging the challenger
Another challenge for Kingsoft was adapting its product and operational model to different market conditions, especially given that in many new markets it competes with one of the largest and wealthiest companies in the world: Microsoft, and its MS Office software. “In China we have a larger market share than [Microsoft], and same goes for many other Asian countries,” says Mr Wong. “But in North America it is much more difficult. It has been here for more than 40 years.”
Kingsoft’s solution? Focusing on mobile productivity tools rather than its natural habitat, desktop software, and instead of making them superior to Microsoft’s, going the opposite way and simplifying them to provide a solution that will not take too much space on the user’s mobile phone.
“We rewrote the whole software from the ground up, to make to it very light,” says Mr Wong. “Many users do not need complicated tools just to send an attachment or open a document, and we give them exactly that.”
Kingsoft keeps not only its software light: the same goes for its overseas teams. Overall, according to Mr Wong’s estimate, only 100 employees are involved in the company’s international operations. However, as the company is focusing on expanding its revenue and user base abroad, its overseas headcount is likely to grow.
“Right now we focus on North American and BRIC countries and we are looking to monetise on a global scale,” says Mr Wong. “But as we continue to expand, we predict we will grow our teams, especially when it comes to sales and marketing and user experience design.”