Issue #15 January 2006

The journey to cross the chasm—Red Hat China review and plan

by Michael Chen

"One of the most exhilarating things about being in business is starting something new from inside something old--launching a product line or service, for example, or moving into a new global market. Not only is it a blast, it is one of the most rewarding paths to growth."

Winning, Jack Welch

In the past year, Red Hat China has strongly grown its business. Slightly over a year ago, Red Hat launched a fully-owned entity in Beijing, China to expand into the Greater China area.

When our launching team went back to their home offices in the U.S. and Asia-Pacific, what we left in Beijing was a 150 square-feet office, three desks, our triangle strategy targeted at Government, Education, and Enterprise customers, and our commitment to Chinese market. Today, one year later, we have seen our bookings increase 150 per cent year-on-year and our team has grown to 20 people in Beijing, Shanghai, Shenzhen, and Hong Kong. In this one year, our cross-functional team fleshed the triangle strategy with more and more content and deliverables.

On the government front, we are trying to help China build a new software industry based on Open Source architecture. Joint labs with government standardization entities were established to work on local Linux standards; over 200 government officers were educated about the real value of open source and Red Hat.

To our education customers, we are promoting open source as a new way to learn. Linux University Promotion Alliance, a local linux promotion entity, has trained 80,000 university and college students in the first 8 months of this year with Red Hat support.

The new fedora mirror site received over 60,000 clicks within the first week of its launch.

In the enterprise market we have been consistently addressing the three key obstacles that limit Linux adoption by Chinese enterprises: first, lack of domestic Linux expertise; second, lack of vendor support; and third, lack of a supported application stack. Today, more than 20 local independent software vendors (ISVs) are porting their applications to Red Hat, while our capability for Chinese-language customer support is growing. A Chinese-language support center will open soon, and over a dozen cities in China have seen training centers open their doors in the past year.

The hard work of many Red Hatters was necessary to make this happen. Creation of Red Hat China forced people of diverse languages and cultures to learn to work well with each other and with new customers within a very short time. For our team however, this past year was just the beginning of a long journey, and, as we ramp up our operations in China, more challenges remain.

The markets in China, Taiwan and Hong Kong have matured differently, which makes it difficult to have a one-size-fits-all strategy for the entire region served by Red Hat China. In People's Republic of China the adoption of Linux and open source is still concentrated in the early adopter segment. Therefore, having a right set of strategies to cross the adoption chasm becomes a "do or die" challenge to us.

To make things a bit more interesting still, the sheer geographic expanse of the market makes it extremely difficult for a seven-person sales team to cover with the right depth and width combination. To further penetrate the market and to grow our business in China, we need to win a handful of key reference accounts in key industries, all of whom are very demanding and typically require complex selling processes.

So after a very brief celebration of our first year anniversary, the team is on the road again. With the ongoing support and understanding from each one of our Red Hat family members, we are confident of our success in the coming years.

About the author

Michael Chen is the General Manager of Red Hat China, leading business operations for mainland China, Hong Kong, and Taiwan. Michael holds an MBA from The University at North Carolina, a Masters degree in Computer Networking Engineering from North Carolina State University, and a Bachelors degree from Nanjing University.