Q&A: Peter Yip, CEO of CDC Software

As executive chairman and acting CEO of CDC Software, Peter Yip has been recognised as one of the few Chinese business leaders to float a Chinese internet firm on the Nasdaq.

CDC Software is now headquartered in Atlanta and provides customer relations management (CRM), enterprise resource planning (ERP) and human resources software for vertical industries such as financial and legal services, healthcare, manufacturing and chemicals. It is also makes computer games.

CDC Corporation also owns the news and information website China.com.

silicon.com recently caught up with Yip to discuss doing business in China, giving away games for free, future acquisitions and more.

silicon.com: Do you think there's a branding problem with Chinese goods and services in the West?
Peter Yip: It's the same situation as the Japanese 30 years ago. Today there's not an issue where you find Sony or Toyota have become big brands. It's like that for the Taiwanese as well.

It won't be an issue in China either as it continues to improve its economy and credibility. When it gets to an international standard then it won't be an issue. They are getting there.

Does that apply to CDC?
For us, we're not so much a Chinese company. We're publicly listed in the US and subject to FTC regulations. China used to own the majority but no more - only seven per cent. My family is a large shareholder there.

The Chinese government has very little influence on us. Some of the senior members of the cabinet are on our board, which actually is an advantage so in a way we can help improve the perception of China in the US market. If [China] continues moving forward in the economy and exports, we are in a very unique position.

Is there something Western businesses can learn from China - perhaps with regards to working hours?
It's a different world in China. Thirty years ago people had no opportunities. There was a lot of political struggle and finally they decided to open up and have now become a major economic powerhouse. The export market has surpassed Japan already in terms of US dollars and they've done remarkably. But with 1.3 billion people living there they need to create jobs.

When you have to feed your children you don't worry about how many hours you are working. There are competitive advantages that the country has to offer but they don't have the luxuries that people in Europe have. China will be competitive because there is so much labour. There are so many new graduates - more than the US - and IT graduates each year.

How is CDC taking advantage of developing economies?
If you look at India and its sheer power, they are changing the whole economics of IT. [CDC is] developing a lot of our work in our Indian development centre in Bangalore. The cost to do this is $32,000 per person which is very high pay by Bangalore standards. They speak good English and are sensitive to business needs. Compared to the $135,000 we would pay in the US, that's a major savings.

China needs to learn a lot from India because they don't speak English as well. I can't put a call centre in China. If you put a support centre [for a Texan company] in Bangalore, they speak with a Texan accent.

Are you focussing on CRM [software] for the next few years?
CRM is a major focus for us. ERP is too and I wouldn't be surprised if we don't buy another couple of ERP companies. The market in China is that they need automation and software.

In Asia there are some new business models for computer games, aren't there?
The games business is growing very fast. [At CDC] we let people play our games for free. Once you get hooked then you can buy some enhancements such as more powerful weapons.

We want more sophisticated gamers. We process 300,000 users at any one time - that's a lot of users. We also have 34 different server groups in store in the major cities in China and we are the broadest network right now, which is worth a lot of money. Other companies just don't have the licences from the government to do that.

There's a theory that because China is a communist country it can build its infrastructure faster than if it were a democracy.
I lived in America for 20 years. I have this argument all the time. People [in China] are so poor. If they don't have things to eat, you can't talk about democracy. We don't want the same things to happen to China as happened to Russia.

We need to be patient. [China] is not quite ready for democracy. They still have a long way to go for the 400 million who don't have money to eat. China has its own unique massive problems. You can't just open up.