SAP prepares for R&D expansion in China

SAP AG is taking steps to boost its research and development (R&D) activities in China as the German business software vendor expands into one of its fastest growing markets.

After establishing a research facility in a rented building in Shanghai at the end of last year, SAP has begun construction of a new R&D campus in the Shanghai Pudong Software Park, company spokesman Markus Berner said Wednesday in an interview. Construction of the new campus is planned in three phases to allow for future expansion, he said.

“Each phase will add capacity of 500 software developers,” Berner said. “But we currently have no plans for phases two and three.”

The reason for the three-phase R&D expansion plan in China, according to Berner, is that SAP wants to be in a position to expand quickly and flexibly if and when it sees a need to beef up its local research team. “China is one of our fastest growing markets,” Berner said. “We want to be prepared.”

More than 800 companies in China, many of them subsidiaries of big multinational companies such as Volkswagen AG, are currently using SAP software products, according to Berner. The list of large Chinese companies using its software includes the China National Overseas Oil Corporation and Petroleum and Chemical Corporation.

SAP provides no breakdown of revenue or earnings for its business in China.

The company expects to have up to 450 software developers in China by the end of next year, according to Berner. SAP Labs China currently employs 200 developers.

The Chinese lab will focus on product localization, software systems for small and medium-size businesses and other technology-related developments, according to Berner. The Shanghai facility joins four other so-called “focus labs,” in Tokyo, Montreal, Sophia Antipolis (France) and Sofia (Bulgaria).

SAP also operates four global research hubs: at its headquarters in Walldorf, Germany; Palo Alto, California; Bangalore, India; and Ra’anana, Israel.

By far the largest is Walldorf, with 5,500 software researchers and engineers, followed by Bangalore with around 1,300 and Palo Alto with around 1,000.

Of SAP’s total workforce of 31,000, more than 9,500 work in the company’s R&D division. In the first nine months of this year, SAP added 716 software developers and engineers to its R&D staff. During the same period, the company spent