Is Shanghai the right choice to locate an SAP Research Lab in Asia? What competitive advantage does this location provide? Discuss the positives and negatives of this location considering the overall SAP Research Strategy.
Although Shanghai provides some competitive advantages, it is not the right choice for SAP to locate its research lab in Asia.
Shanghai provides the following competitive advantages as one of SAP’s choices to locate its SAP Research Lab in Asia: •
Large potential Chinese market for business applications: o
ERP software systems are not yet widely adopted in China. In early 2008, over 55% of Chinese enterprises had not adopted ERP systems, either used in-house systems or no systems. SME (which had potential to grow into large enterprises) market was dominated by two local players o
A potential for many innovative and new designs that may be conceived in China o
SAP executives hoped that establishing a research unit would open up the Chinese government to purchasing and using SAP software for tax management and internal administration in the future •
Chinese government provided various support to stimulate greater levels of innovation and indigenous research capabilities in China. Such support included and was not limited to tax benefits for both enterprises and employees, creation of software parks, tightening of IP protection regulation (despite continuing challenges), etc. o
Establishing a research operation was highly encouraged by the Chinese government, which would help SAP to develop its business relationship with the Chinese government and eventually strengthen its market position in China •
The existing development group (SAP China Lab):
Most convenient and lowest-cost option
Established connection with the top 10 universities in China to provide access to a quality talent pool •
Shanghai as a city (comparing with nearby second-tier Chinese cities and some other cities in Asia): o
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