In many ways, the Chinese software company Neusoft epitomises the development in China during the last ten years of the open door policy. Once a state owned university, Neusoft it is now a software company in private hands, the first to be listed on the Chinese stock market. A replica of the famous bull situated outside NYSE is strategically placed outside its impressively modern and minimalist HQ in Shenyang.
It is, of course, the very same bull that inspired the expression bull market. In a depressed world economy, China’s 8 per cent annual economic growth sends a strong message to the world as to which country will be the next economic superpower. As China gradually enters the World Trade Organization, there is much talk of China as the factory of the world. China, however, disagrees. Indeed, the Chinese are determined not to be exploited by trade partners by providing low-cost labour while the rest of the world profits. Neusoft is one example of how China is challenging such old perceptions.
With its university roots (the letters NEU stand for North East University), Neusoft demonstrates how brainpower can fuel the Chinese economy. Currently, the company has over 5,000 employees, 75 per cent of whom hold a bachelor's, master's or PHd. degree and have studied overseas. Internally, the managers are referred to as teachers, and the CEO as headmaster. An obvious advantage of this is the strong emphasis on Research and Development (R&D). 15-20 per cent of the company’s profits go into R&D efforts.
Strategic cooperation with foreign companies
Acknowledging the need for input and business experience, Neusoft has conducted extensive cooperation domestically and internationally. For instance, Neusoft has established strategic partnership with renowned companies such as Sun Microsystems, IBM, Cisco and Computer Associates (CA), and has jointly funded the Neu-Nokia CommTech Company.
As China is such an interesting market, the incentives for mutually beneficial Joint Industry Projects are numerous, enabling Chinese companies to rapidly develop and learn from huge multinational companies. This approach is a pre-requisite, as Neusoft and other Chinese companies also have to compete with the same, well-established multinationals.
Strong need for documented quality
President of Neusoft, Yongfeng Wang, is committed: "Quality assurance is our life. The quality of our products is only the quality of our software. We have 200 employees exclusively dedicated to quality assurance, making sure it is an integral part of all our processes and the employees’ routines. We are providing comprehensive solutions, not simple programmes, which means we manage huge projects and need excellent management systems. Systems for continuous improvement are also vital in our work."
Neusoft is a relatively new provider of fundamental infrastructure such as telecommunications, social insurance, electric power, government and taxation, where nothing is allowed to go wrong. Further, documented quality assurance work is vital for all Chinese companies. The reason for this is simply that Chinese industry is entering many new markets abroad and, for the first time, has to prove to new customers that it delivers quality products. Neusoft was the first Chinese Software companyto gain ISO 9001 certification of their management systems and DNV has since provided further quality assurance audits.
"The assistance from DNV has been important, not only regarding the work that is carried out in the HQ in Shenyang, but also in Neusoft’s many branches, our so-called virtual HQs around China and abroad," says Yongfeng Wang.
Internationalisation
Since Neusoft was established in 1991, it has enjoyed an annual growth rate of some 60 per cent. Now the growth is estimated to be around 30 per cent annually, while a carefully managed internationalisation process is evolving. In the next five years, Neusoft plans to be solidly established internationally. Bundling products with industry giants such as US-based Computer Associates (CA) and providing software for Toshiba laptops Nikon digital cameras are but a few examples of how Neusoft has been delivering software around the world. Its invisible products have gained recognition beyond the borders of China, and with more visible proof of the quality of their products, Neusoft will continue to make its presence known outside China as well.