With the rapid evolution of China’s IT laws since 2017, multinational companies (MNCs) are facing more challenges running their global applications.
The key transition opportunity for MNCs is to leapfrog the move to SAP S/4HANA, successor to the previous core SAP ECC product.
The RISE with SAP and SOAR with Accenture approach help companies move to the cloud faster and extend their capabilities to transform and innovate.
China’s IT laws have been evolving rapidly since 2017. In light of new legislations on data protection and cybersecurity, multinational companies (MNCs) are increasingly asking how they should handle their global applications and run businesses.
Even if an MNC is initially focused on just one issue, such as how to deal with changes to data protection regulations, it’s important for them to have a holistic perspective on this area. And that must include how to accelerate business in one of the world’s key markets for future growth.
Conformity with local regulations
The focus in China on data protection has intensified in recent years. In implementing these new requirements, companies in China cannot rely on traditional principles and interpretations of existing data protection regulations. On the other hand, non-compliance with these new regulations can also lead to serious business risks, such as legal penalty, business disruptions, financial liability and reputation risks.
Importance of China business and time-to-market
The Chinese market is now a key engine of growth for MNCs. It offers massive scale, along with opportunities for further acceleration as the Chinese consumer market enters a new stage of expansion. As one of the world's most digitized and dynamic economies, China requires companies with operations there to commit to investment in specific solutions and customization. These investments must support the flexibility and agility needed to respond quickly to requests from customers, suppliers and ecosystem partners.
Digital technologies are the key to success in the Chinese market. New technologies are being widely applied by companies to power their future growth. According to the GfK Global Roper Reports®, nearly 44% of surveyed Chinese internet users are willing to embrace new technologies, at 12% higher than the global average.
Chinese customers and consumers have more power and influence than ever before. Digitization has given them new choices. They know what they want, where they want to buy and how they want to be supplied. The Chinese consumer market has become the number-one driver of national GDP growth, with a value of 44 trillion Yuan in 2021.
Leading companies in China are caught in a perfect storm. They’re wedged between digital giants and thousands of innovative small to mid-sized brands. Xiaomi launched its TV business in 2013 and captured 19% of the domestic TV market share in six years. Now it’s considered to be the top competitor among household appliance manufacturers.
New business models
One-size-fits-all business models are redundant. Chinese consumers want their own, relevant experiences and they expect companies to be ready to provide them. At the same time, the spectrum of opportunities created by the Metaverse and the need for compressed transformation based on cloud will force businesses to reinvent.
Ensuring adequate IT resilience
A final point to be taken into consideration: the IT resilience of MNCs’ enterprise applications. Changing regulations and stricter rules on network operators could raise issues for global applications that have been deployed in China.
Roadmap for MNC localization in China
For companies – with relevant business in China – starting their SAP S/4HANA journeys, there’s a clear opportunity to include China as one of the first countries on the roadmap. Business case benefits would be accelerated by enabling new SAP S/4HANA capabilities in one of the world’s largest countries, while meeting key requirements for data protection, performance and business agility.
Other companies still evaluating the SAP S/4HANA option (including timeline and roadmap) could have an opportunity to "pilot" SAP S/4HANA in China while the rest of the world continues to run SAP in ECC. The main purpose of doing so would be to meet business needs in China while proving "why SAP S/4HANA?" and potentially accelerating the company’s journey on a global scale.
Compliant and future-ready with SAP solutions
A global luxury fashion group integrated its Retail & Wholesale from two legacy ERP systems into a single global Enterprise Resource Planning (ERP) platform.
Scale across globe at speed with SAP S/4HANA
To tackle current challenges and achieve growth targets, a leading Japanese cosmestics manufacturer developed an ERP transformation strategy.
Even if a “China-for-China” SAP approach is not strictly mandatory at present, an increasing number of companies see a clear opportunity ahead: allowing the level of flexibility that’s essential for their China business and protecting the organization itself by avoiding any risk of disruption from new regulations.
With the broad range of services we provide in China, years of expertise and the largest SAP practice in the local market, Accenture can optimally support our clients in their digital SAP transformation in China.