Xuanwu Cloud Technology Holdings Limited (hereinafter referred to as 'Xuanwu Cloud') successfully went public on July 8, 2022, with a global issue of 3,439.05 million shares at a tender price of HK$6.24 per share.
During the Hong Kong listing process, Frost & Sullivan mainly undertook the following tasks: helping the company accurately and objectively understand its positioning in the target market, using objective market data to discover, support, and highlight the company's competitive advantages, assisting the company, investment banks, and other intermediaries in completing relevant parts of the prospectus (such as the overview, competitive advantages and strategy, industry overview, business, and other important sections), facilitating communication with the Hong Kong Stock Exchange and investors, helping investors quickly understand the market ecosystem and competitive landscape, and assisting the company in completing feedback on various industry-related issues from the Hong Kong Stock Exchange.
Overview of the Intelligent CRM Service Market in China
Definition of Smart CRM Service
Intelligent Customer Relationship Management (CRM) refers to CRM services that integrate cloud and communication capabilities, artificial intelligence, and data intelligence, providing both PaaS and SaaS services. Intelligent CRM services can help customers manage key operations throughout their entire lifecycle in a more efficient and effective manner.
Characteristics of the Chinese Intelligent CRM Service Market
The traditional CRM market emerged in China in 2000 and further developed in 2015 after benefiting from the rapid development of the Internet and SaaS services. Entering 2018, smart CRM service providers began to emerge, offering CRM services that integrate cloud and omnichannel communication, artificial intelligence, and data intelligence capabilities. Smart CRM service providers have effectively addressed the pain points of traditional CRM services (such as lack of customized products, low operational efficiency, and difficulty in improving customer retention rates). In the long run, they are subverting the traditional market.
Value Chain Analysis of the Chinese Intelligent CRM Service Market
The value chain of the Chinese intelligent CRM service market consists of upstream hardware and software providers, midstream intelligent CRM service providers, and downstream industry users.
Upstream suppliers (including hardware and software vendors) are crucial. Hardware vendors mainly include telecom network operators and infrastructure providers, as well as cloud computing server vendors; software vendors primarily provide middleware, databases, and software development tools for midstream platforms. Technology, media, telecommunications (TMT), finance (including banking, securities, and insurance), government and enterprise, and retail are the main downstream industries in China's smart CRM service market.
Source: Frost & Sullivan report
Market scale and growth of China's intelligent CRM service industry
Assuming that all enterprises use a fully integrated cloud and communication platform, along with artificial intelligence and data intelligence capabilities, and provide PaaS and SaaS services, the market for smart CRM services has seen tremendous growth in recent years due to the development of cloud communication facilities, the continuous increase in internet user numbers, and strong demand from downstream users. According to a Frost & Sullivan report, the TAM (Total Addressable Market) of the smart CRM service market increased from RMB 251 billion in 2017 to RMB 718 billion in 2021, with a compound annual growth rate of 30.1%. In the future, the TAM of the smart CRM service market is expected to grow to RMB 2800 billion by 2026, with a compound annual growth rate starting from 2021 of 31.3%. With the rapid growth of the entire smart CRM service market, different types of participants are trying to expand their service portfolios, so the market's TAM is still in a relatively fragmented stage.
The TAM of the Chinese intelligent CRM service market,2017 - 2026E
Source: Frost & Sullivan report
According to a Frost & Sullivan report, entering 2018, smart CRM service providers began to emerge, offering CRM services that integrate cloud and omnichannel communication, artificial intelligence, and data intelligence capabilities. The total revenue of the smart CRM service market increased from RMB 1.6 billion in 2018 to RMB 72 billion in 2021. In the future, it is expected that the total revenue of the smart CRM service market will increase to about RMB 368 billion by 2026, with a compound annual growth rate of about 38.6% starting from 2021. In 2021, the total revenue of the smart CRM service market accounted for 10.0% of the smart CRM service market TAM, and it is expected to account for 13.1% of the smart CRM service market TAM by 2026.
Total revenue of the smart CRM service market in China,2018 - 2026E
Source: Frost & Sullivan report
Enterprise Service Market Based on CRM, TAM of Intelligent CRM Service Market, and Revenue from the Intelligent CRM Service Market (China)
2021 compared to 2026 projections
Source: Frost & Sullivan report
Main Drivers of the China Intelligent CRM Service Market
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The stable development of communication infrastructure
In recent years, China's information technology industry has grown steadily, and basic communication facilities have been continuously improved, providing a solid foundation for the development of the smart CRM service market. The total expenditure on information technology (mainly used for building basic information technology facilities) increased from RMB 2491.2 billion in 2017 to RMB 3227.8 billion in 2021, reflecting the stable development of basic information technology facilities. A stable communication infrastructure is crucial for the development of the smart CRM service market because it relies on the Internet and cloud computing to obtain and process customer data, thereby providing customized one-stop smart CRM services for different customers.
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The strong demand from downstream industries for improved service quality and comprehensive intelligent CRM services
With the increase in the number of enterprises and the continuous changing customer needs, downstream industries are facing fierce competition. Therefore, it is crucial to deeply understand the consumption habits and preferences of different customers to improve customer service quality and satisfaction. Smart CRM services provide an intelligent comprehensive platform that can analyze first-hand customer data and quickly form customized solutions, thereby enhancing the service quality and operational efficiency of enterprises. At the same time, more enterprises have realized the importance of comprehensive smart CRM services, which use advanced technology to build a comprehensive and efficient data and service system, and optimize the full lifecycle system of enterprise products.
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favorable policies
The Chinese government has promulgated and implemented a series of policies to encourage the adoption of cloud computing, artificial intelligence, and big data, thereby promoting the continuous development and widespread application of cloud communication services and intelligent CRM services. For example, the Ministry of Industry and Information Technology has issued the 'Three-Year Action Plan for Cloud Computing Development (2017-2019)', to encourage technological innovation and transformation among cloud computing-related enterprises.
The future development of China's intelligent CRM service market
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Integration of Artificial Intelligence and Big Data
The integration of artificial intelligence, big data, and smart CRM services is expected to become a future market trend. According to the 'Artificial Intelligence Development Report 2020', China ranks among the world's top in multiple subfields of artificial intelligence, including patent applications, with the largest number in the world. Benefiting from the rapid development of artificial intelligence, enterprises can optimize software usage efficiency by utilizing voice robots, image recognition, and automatic text input optimization software, and reduce the difficulty of using software. Big data is mainly reflected in business intelligence and data intelligence, helping enterprises better manage and retain customer data, and uncover potential business opportunities. By depicting multi-dimensional anonymized user profiles such as name, age, gender, purchase information, browsing behavior, and other dimensional information, enterprises can clearly understand their customers and business, thereby achieving higher sales through precise positioning.
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Development of the complete industrial chain
Traditional CRM services mainly help enterprises organize and locate their customer databases for effective resource allocation, as well as simplify communication methods with sales staff. To be more customer-centric, a complete industrial chain connecting enterprises, distributors, and service providers is expected to become one of the main features of the smart CRM service market in China.
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Develop a CRM service with full-touch communication
Intelligent CRM service providers are expected to offer comprehensive omnichannel marketing solutions with full-touch communication capabilities (such as voice and text verification modules, text and phone modules, encryption, video messages, 5G messages, and WeChat message modules), to meet customers' various communication needs and empower ready-to-use communication capabilities covering the entire lifecycle.
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Cross-selling and comprehensive solutions
To meet the diverse needs of downstream users throughout the entire business process, it is crucial for enterprises to provide comprehensive solutions including marketing, sales, service, and technical support, covering both pre-sales and after-sales services. It is expected that service providers will adopt cross-selling strategies across the marketing cloud, sales cloud, and customer service cloud through replicable technical foundations and experience. Therefore, by leveraging marketing traffic from different products, the marginal cost of acquiring new users is expected to decrease, making it more cost-effective.
Competitive landscape of the intelligent CRM service market in China
According to a Frost & Sullivan report, the smart CRM service industry in China is highly concentrated. Based on the revenue of domestic smart CRM service providers in 2021, our company is the largest smart CRM service provider in China, with a market share of 13.8%.
Market share of the top five participants in China's smart CRM service market in 2021
Source: Frost & Sullivan report
Frost & Sullivan has rich research experience in the communications technology industry and has assisted well-known enterprises in successfully listing on capital markets. Successful listings include Huitongda (9878.HK), Innovent AI (2121.HK), SenseTime (0020.HK), Qinhuai Data (NASDAQ: CD), Mingyuan Cloud (0909.HK), WeCom Group (2013.HK), WanKaiYilian (1762.HK), AsiaInfo Technology (1675.HK), Feisida (8342.HK), Aurora Mobile (NASDAQ:JG), Jingguan Holdings (8606.HK), WeBank (2003.HK), HuitongPay (1806.HK), Atlinks (8043.HK), Zioncom (8287.HK), ISP Global (8487.HK), Vobile (3738.HK), Aibo Technology (2708.HK), iClick (NASDAQ:ICLK), Shengye Capital (6069.HK), Anlink International (8410.HK), Anke Systems (8353.HK), Junmeng International (8062.HK), Future Data (8229.HK) and Yasy Backup (8290.HK).
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