The digital economy is becoming a new engine driving economic growth globally. As the Chinese economy shifts gears and upgrades, the digital economy has become a key force in economic transformation and upgrading due to its innovation-driven and efficient features. To promote the development of the digital economy, the government has continuously increased investment in digital infrastructure, such as the construction of 5G networks, big data centers, and cloud computing platforms, providing solid technical support for the digital economy. By implementing a series of incentive industrial policies, the government supports the deep integration of digital and intelligent technologies with the real economy, promoting industrial digitization and digital industrialization.
The digital and intelligent transformation of Chinese enterprises is crucial for enhancing their overall competitiveness. Digital and intelligent transformation can not only help enterprises improve production efficiency and reduce operating costs, but also optimize decision-making processes through data analysis, thereby enhancing market adaptability and innovation capabilities. Against the backdrop of increasingly fierce global competition, digital and intelligent transformation has become an inevitable path for high-quality growth of enterprises.
On March 12, Frost & Sullivan (hereinafter referred to as 'Frost & Sullivan') officially released the '2023 China Enterprise Digital Transformation Market Research Report' (hereinafter referred to as 'the Report'). The report analyzes the current market situation of digital transformation in Chinese enterprises, providing a comprehensive exposition from dimensions such as industrial background, market size, cross-border comparison, technological development, application fields, driving factors, development trends, and competitive landscape. It tracks the context of industry and technological development, explores the huge potential for industry development, analyzes market development trends, and aims to provide comprehensive industry insights for participants and observers in the China enterprise digital transformation market.
1
Enterprise-level management application SaaS market
Cloud services are a frontier and core foundation for industrial digital transformation and enterprise digitalization, leading the transformation of underlying IT architecture and business models in the digital economy. Mature markets continue to increase their spending on cloud services, with China's cloud service market approaching global levels over the next five years. The SaaS market is the main direction of development in the cloud service market; the U.S. market leads China's market by a greater margin in markets closer to application scenarios, but China's cloud service market is expected to grow at a higher rate than the U.S. market, showing a trend of catching up with the U.S. market.
Enterprise management applications are a key part of the digital and intelligent transformation process for enterprises. Enterprise management application SaaS has become the core factor driving the growth of the overall enterprise management application market in China. The compound annual growth rate (CAGR) will reach 26.3% over the next five years, and the enterprise management application SaaS market will reach 856 billion yuan by 2027.
In the first three quarters of 2023, comprehensive software vendors such as UFIDA and Kingdee continued to hold the leading positions in the SaaS market for enterprise management applications in China. UFIDA ranked first with a market share of 10.4%.
2
Digital and Intelligent Transformation Market for Small and Micro Enterprises
China has a vast number of small and micro enterprises, which are an important part of the national economy and one of the main growth engines. As an important component of the market, small and micro enterprises demonstrate strong growth vitality. The number of small and micro enterprises in China increased from 34.57 million in 2018 to 52.56 million in 2022. At the same time, the government has issued relevant favorable policies to provide more opportunities and support for the development of small and micro enterprises, promoting the emergence of a large number of new ones.
Growth, profitability, and compliance are the three most critical issues faced by small and micro enterprises for sustained development; digital intelligence can effectively meet these needs in multiple aspects of growth, profitability, and compliance.
At present, the overall usage rate of management software for small and micro enterprises has reached a relatively high level. Only a minority (about 12%) of surveyed small and micro enterprises do not use any management software. However, when looking at different types of software, the penetration rate of a single software product is still relatively low.
3
Market for Micro and Small Enterprises' "Business, Finance, Taxation SaaS"
The 'Industry, Finance, Taxation Application SaaS' for small and micro enterprises refers to application software that supports core business processes, financial management, and tax management, delivered as cloud services. It is the most essential area for the digital and intelligent transformation of small and micro enterprises.
The value of the 'Industry-Finance-Tax Application SaaS' for small and micro enterprises is not only reflected in providing ready-to-use, standardized digital and intelligent products that improve quality and efficiency, but also in the manufacturer's ability to meet the differentiated needs of different industries such as manufacturing, retail, and commerce through flexible configurations and personalized solutions. This enables the manufacturer to enhance the efficiency of refined management across the entire process for small and micro enterprises.
The driving factors for the market of 'Industry, Finance and Taxation Application SaaS' for small and micro enterprises include:
1) Macroeconomic side:As the scale of China's digital economy continues to rise, it has become a new engine driving high-quality development of the Chinese economy. Various new business forms emerging from the digital economy have become important new growth points for the Chinese economy;
2) Business Side:The online business of digital-native small and micro enterprises continues to develop; traditional businesses are undergoing digital and intelligent transformation, with online and offline services 'complementing each other'.
3) Regulatory side:Tax supervision is gradually transitioning from 'tax management based on invoices' to an era of 'tax governance based on data'. The digitization of invoices places higher demands on the fiscal and tax standardization of small and micro enterprises and the intelligentization of their systems, thereby driving the rapid development of the 'Business Tax Finance Application SaaS' market for these enterprises.
Currently, the market participants in China's small and micro enterprise 'Business Finance Tax Application SaaS' mainly include comprehensive SaaS vendors (such as Changjie Tong, Kingdee), innovative vertical SaaS vendors (such as Guanzhuangpo), and mid-to-long tail SaaS vendors. Among them, comprehensive SaaS vendors possess strong R&D and delivery capabilities, capable of providing products that span multiple business areas of small and micro enterprise management, meeting the vast majority of their needs, including financial management, tax management, inventory control, supply chain management, production management, marketing management, etc., providing full lifecycle services for small and micro enterprises; in addition, comprehensive SaaS vendors can offer complete customer service support to help enterprises better utilize SaaS products.
In the first three quarters of 2023, Changjie Tong ranked first in both market share and cumulative paid users in the SaaS market for financial and tax applications for small and micro enterprises in China. Its market share reached 9.4%. Among the more than 400 surveyed small and micro enterprises, Changjie Tong's customers had the highest satisfaction with all dimensions of its brand and products; at the same time, Changjie Tong's products had the highest net recommendation value, reaching 49%.
4
Market Outlook for "Business, Finance, Taxation SaaS" for Small and Micro Enterprises
The main development trends of the 'Industry, Finance and Taxation Application SaaS' market for small and micro enterprises in China include:
1) Through technological innovation, the SaaS for business finance and tax applications of small and micro enterprises will be further deeply integrated and coordinated. By closing the loop of business finance and tax management functions, it will help small and micro enterprises transform into data-driven enterprises;
2) As the market for small and micro enterprises matures and diversifies, manufacturers will pay more attention to constructing a comprehensive product matrix to meet the differentiated needs of tens of millions of small and micro enterprises across various industries, thereby deeply tapping into market potential;
3) Small and micro enterprises can establish their own data assets centered on business data by using the industry finance and taxation SaaS product. This type of data asset will bring value to the mining and application of credit information for small and micro enterprises, promoting them to explore the monetization of data assets;
4) With the further development of generative AI and large models, as well as the continuous deep integration of industry finance and tax SaaS products with advanced technologies, industry finance and tax SaaS systems will become more intelligent, open, and interconnected.
