Oracle, which acquired NetSuite for $9.3 billion last year, may use partner Tencent to help distribute NetSuite products in China. Tencent is currently the local partner responsible for the distribution of Oracle Cloud products in China, which are jointly marketed by the two companies.
By using Tencent to distribute NetSuite products as well, Oracle will tap into the lucrative Software-as-a-Service market in China, which is projected to reach total sales of up to $1.6 billion in 2017, and could top $4 billion by 2020, according to a study by Forrester Research.
Oracle’s push to expand operations in China has been prioritized by company management, who have provided the Oracle NetSuite global business unit with the budget and a mandate to drive business in mainland China ‘as soon as possible.’
Jim McGeever, executive vice president of the Oracle NetSuite business unit said that the company plans to open a direct office and a data center on the mainland, in order to comply with Chinese data storage regulations. “We’re going all in.”
The purchase of NetSuite is part of Oracle’s drive to redirect from on-premises services to those distributed through the cloud. Leveraging the cooperation agreement between Oracle and Tencent may be crucial to the company’s expansion to the mainland China SaaS market.
The cooperation agreement, signed last year, made Tencent the local partner within China with the ability to sell Oracle cloud products to Chinese customers. This partnership was required, due to Chinese government restrictions on foreign cloud companies operating within the country.
With NetSuite products on offer and a mandate for expansion, Tencent may be tapped to distribute NetSuite products as well.
Oracle chief executive Mark Hurd noted that the company has already invested in facilities and employees in China. He said, “We have a development centre in Beijing that does a lot of localisation for our products, and we’ve doubled our sales force in China over the past year.”
With the help of Tencent, Oracle is poised to be a major competitor in the Chinese cloud market, on par with SAP and Alibaba, whose partnership has led them to dominate the market in China even beyond global cloud leaders Microsoft and Amazon.