Ygl expands ERP business via JV with Chinese software firm

Updated : 05-09-2007
Media : The Edge
Story By : Sharmila Ganapathy
via www.biznewsdb.com

PETALING JAYA: Ygl Convergence Bhd has teamed up with Chinese software firm Kingdee International Software Group (HK) Ltd to expand the enterprise resource planning (ERP) system in the region and China.

Yesterday, it entered into an agreement with Kingdee subsidiary Carterton Group Ltd (CGL) to set up a joint venture firm, Kingdee Southeast Asia Software Group Sdn Bhd, that will be based in Malaysia. The agreement is expected to be finalised by year-end.

The JV company will promote, market and distribute Kingdee K/3 products and relevant ERP products in the Asean market on an exclusive basis. The scope of the business shall include the development, production and sales of enterprise management software and provision of technical support and services.

Kingdee is a leading provider of enterprise management software and e-commerce application solutions for China and Hong Kong. According to Morgan Stanley Research, Kingdee has 10.3% of China¡¦s enterprise software market share, making it the second-largest player.

Ygl will have a 65% stake in the JV company, CGL 28% and Hong Kong-based investor Alvin Kok Kah Sing 7%.
Speaking at the signing ceremony yesterday, Kingdee chairman Robert Xu said it was investing several million ringgit in the venture.

Ygl will invest RM5 million into the JV company for its stake. CGL¡¦s stake is through its investment in the trademark usage, technologies and research and development involved.

Xu said Kingdee chose Ygl as its partner because it was a leading ERP solutions provider in Malaysia. He said: ¡§In order for us to come to Southeast Asia, our product needed to be localised. We are a newcomer, so we needed a strong local partner in ERP.

If we can build up our distribution network, we believe we can dominate the (Asian) region.¨

Ygl chief executive officer Yeap Kong Chean said the venture would help it establish its distributor network in Southeast Asia and later the greater China region.

¡§We already have six offices in five countries. We hope to add more than 100 dealers within three years in the Asian region,¡¨ he said.

According to Yeap, currently in close to 50% of Ygl¡¦s revenue came from its overseas business. The new joint venture is expected to contribute a further 20% in revenue, he said.

He said the target market would be small-to-medium enterprises including manufacturing and distribution companies, adding that the JV company had recently secured nearly RM500 million worth of deals for products and services to customers in Malaysia and Singapore.

Among the customers are Singaporean firms Pan-West and hardware vendor Peng San. Ygl and Kingdee are currently in talks with Peng San¡¦s subsidiary in Suzhou, China.

The local customers are DSOP Office Systems and Supplies Sdn Bhd and Prodelcon Sdn Bhd.