Monday, 18 December 2006

BEA to Acquire in China to Grow

BEA Systems plans to acquire companies in China on its way for inorganic growth, and keep the competition at bay. It has been aware of the competition's growth.

Faced with increased competition from IBM and Oracle Corp., US based business software maker BEA Systems plans to acquire companies in China to bolster its prospects there and grow inorganically.

BEA Systems CEO and Chairman Alfred Chuang, BEA CEO and Chairman said, “BEA is now seriously looking at acquisition opportunities in China and it will expand its local operation significantly in the next two or three years."

BEA Systems, which has been growing at almost 50 per cent for the last three years, has seen its business grow 40 per cent in China last year backed by a strong private and government demand for its billing and data management software. While Asia contributes 15 per cent of BEA's revenues, majority of its sales are in China and India—two of Asia’s largest and fastest growing markets.

Even last year, BEA did announce plans to acquire companies in China but nothing came out of that announcement. BEA, under assault from a slew of new competitors, has been eyeing the acquisition route to gain market share. Now it is repeating the same song all over again. However the company did grow its R&D staff by 20 percent to 500, which it claims is an indication of its acquisition mood.

China, along with India is an important market for BEA as it gets almost 15 per cent of its revenues from these two nations. By acquiring local companies in China, BEA aims to have a wider presence, larger portfolio of products and perhaps keep the competition at bay. "We expect to gain larger market share here in the coming years," Shane Pearson, BEA's vice-president of product management said. Over the last few years, BEA has acquired a slew of companies that complement it across the world.

Citing figures from Analysts International, an IT consultancy, BEA said it currently owns 28.9 per cent of the middleware market in China Pearson said, "Since we have been in China for ten years, our relationship with local partners will help us maintain the lead.”