Wednesday, 24 June 2009

Geong – Going for Content Management

(By Philip Carnelley – Wednesday 24th June 2009 8:30am). Interesting conversation yesterday with the CEO and CFO of AIM-listed, China-based enterprise content management (ECM) software firm, Geong, following its announcement of its prelims for the year ended 31 March. For the record, turnover nearly doubled (organically) to £14.7m, while operating profit lifted just under 50% to £1.7m.

ECM is a surprisingly global business. We have recently met companies from Bulgaria, the Czech Republic and Scandinavia, and now, China. Despite its London listing (and registration in Jersey), 95% of Geong’s business is to the Chinese market. Its chairman and CEO are Chinese, albeit with experience working for Western companies, including IBM and Compaq, and it appointed a CFO from the UK earlier in the month.

The ECM market in China is in its infancy, though Geong claims to be the third biggest ECM provider in China, after IBM and Oracle. Geong sells to major corporations – primarily banks, like ICBC, and telcos including China Mobile and Huawei – and also to the SME market. Unfortunately Chinese SMEs have suffered in the economic downturn – most are dependent on exports. But unlike many companies we track, which have seen their systems integration revenues plummet in the downturn, Geong managed to grow by pushing its services side: services around its PortalAge platform to large enterprises almost tripled, to £10m, while licenses of the SME-oriented SmartBox product fell nearly 90% to under £200k. Geong hopes a SaaS version and new partner-led sales strategy will revive SmartBox’s fortunes.

Despite having a representative in Canada, and an English language version of the products, Geong has no real designs on North America or the UK, saying that there is so much potential in China that it doesn’t need to look elsewhere. Its problem is reach – across such a vast country, getting to companies other than the very biggest requires a partner-led model. As the economy continues to grow more strongly – and it’s widely predicted that China’s economy will double within 30 years to become the world’s largest – then the opportunity out there should grow commensurately. However there can be no doubt a bigger opportunity will also bring in the US majors in earnest. It only goes to show that doing business in China is challenging even for companies steeped in the culture.

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