SAP reports highest quarterly revenue in China

SAP AG, the world's largest enterprise management software provider, announced its highest-recorded revenue in the China market in the fourth quarter of last year, said the China executive of the company.

SAP, based in Walldorf, Germany, saw "strong double-digit" revenue growth in its software sector last year, said Mark Gibbs, president of SAP Greater China.

The company refused to disclose its exact revenue in China as it faces tough competition from other players such as Oracle Corp.

The banking, oil and gas and retail industries were the major growth engines for its China business.

China is projected to be the world's largest market in terms of new software sales by 2020 boosted by robust demands in cloud and database, the company said in November.

Cloud computing will be SAP's next big step in China, Gibbs said.

SAP has introduced one product to China in the cloud sector through a joint venture with local carrier China Telecom.

The cloud sector is closed to wholly owned overseas corporations by industry regulation.

"We will make every product (on cloud computing) available by 2014," said Gibbs. "Our cloud business will have a very bright future in around 2015."

Currently, the company's major business in the country remains in application software and services, which have a lower margin than providing cloud services.

The company achieved triple-digit revenue in cloud for 2013 in China, it said.

"SAP expended cloud services through partnerships with local governments in cities, such as Ningbo in Zhejiang province and Nantong in Jiangsu province, to serve manufacturing and transportation firms," said Gene Cao, senior analyst at Forrester Inc.

"Although cloud services can bring the company higher profits, it remains unclear if it will achieve return on investment after years of heavy investment in headcount and marketing," Cao said.

SAP has a long-term investment plan in China and annual return on investment is not what it is looking for, Gibbs responded.

SAP entered the cloud business in 2012 after spending $7.7 billion to acquire two cloud companies.

The company is aiming for $4-4.7 billion of cloud revenue in 2017.