Capinfo: Building success in IT infrastructure

By Yang Cheng and Han Tianyang (China Daily)
Updated: 2009-09-11 08:13

Wang Xu was the last employee hired by Capinfo Co Ltd when it was founded in 1998 with 43 staff members - but it's fair to say he has done well.

He is now president of the Hong Kong-listed company that provides urban database and administration services.

For the past decade, the 40-year-old PhD in economics and management from prestigious Tsinghua University has not only experienced his own personal promotion, but also watched the growth of Capinfo, which is owned by the Beijing municipal government.

The rapid expansion of Capinfo and Wang's personal advancement reflect the pace of growth at the Zhongguancun Haidian Science Park where the firm is headquartered, a growth rate rarely equaled in other areas in the Chinese capital, observers say.

Wang could be a poster figure for Zhongguancu's new entrepreneurs - young, smart, promising and independent. He said he prefers the style at the "Summer Davos" World Economic Forum, which he is attending. Its delegates register by themselves and handle their own luggage.

Wang said Capinfo chose to locate at the Haidian Science Park because it offered many preferential tax policies for startup hi-tech enterprises and nearby universities and research institutions that provide abundant human resources and a good environment for innovation.

"Zhongguancun is like a 'Silicon Valley' in China, where hi-tech industries, especially IT companies, have gathered to form an aggregate effect," Wang said. "We have competitors as well as partners here. We learn advanced experience from our counterparts inside the park."

"Ten years or even longer ago, Zhongguancun was noted for the Hilon Mansion, where all kinds of computers and parts could be found at a cheap price. Today the mansion is still there, but the park has become a combination of private, State-owned and even foreign hi-tech enterprises."

The cluster of top companies has given the park a critical mass difficult to match elsewhere in China.

New business model

Capinfo: Building success in IT infrastructure

The company has implemented major e-government private network information and database projects in Beijing for social security, healthcare, emergency response and other community services.

Capinfo built the first Beijing municipal government website, Beijing.gov.cn, in 1998, followed by the Beijing hotline in 2001

"We are proud to carry out these projects for the people's well-being," said Wang.

As the multilingual services supplier for the Beijing Olympic Games, Capinfo provided comprehensive information to the international public, especially foreign athletes and visitors, to overcome the language barrier.

Wang told China Daily that Capinfo has had a sound business performance for the past three years, with average annual sales of more than 300 million yuan.

The firm has made a profit of about 50 million yuan last year. Wang predicted that Capinfo will maintain stable growth of 15-20 percent in the coming years.

"Our sales revenue in the second quarter has seen an increase of 50 percent year-on-year," he said. "Sales growth despite the financial crisis is largely due to the nature of our businesses, which are mainly based on the rigid domestic demand."

Wang is in fact very optimistic about future domestic demand, which will present huge opportunities for his company.

"For example, along with the urban-rural integration, more people will need to participate in the social security system, so the demand is solid," he said.

"As long as we can meet the customer's needs with satisfying services, the company will have sound progress."

Yet Capinfo faces challenges, the biggest of which is its 10-20 percent annual growth rate compared to counterparts that have had annual growth of 40-50 percent.

But he is certain of steady progress due to Capinfo's business model, which builds, owns and operates sites, an approach known as BOO. The company first invests to build an information system and then gains payment in maintenance and upgrade from its services to customers, mostly in the government sector.

The Capinfo management team learned the business model from United Bank of Switzerland during an overseas tour.

Compared with the traditional models, in which customers buy and own the system, the BOO mode offers clients the advantage of ease.

"It's just like living in a ready-made and well-decorated house," said Wang, "You don't need to bother with how the house will be built or decorated, you just move in and pay."

"We made our own contribution to the Haidian park by introducing the BOO mode, which will be the mainstream, and what we have to do now is to advertise this kind of service to more people and to attract more customers."

The BOO model has been applied to Beijing's medical insurance information system, community management information system, and Beijing.gov.cn. Wang hopes the approach will be used in more fields such as managing the public fund for housing construction and others.

Compelling culture

Wang and his colleges next plan to use the Internet to expand their businesses to other regions of the country.

"We are now in the research stage and cooperating with other Internet-related companies in Zhongguancun to find a proper way to expand our services across China."

Facing fierce competition, Wang believes that the Capinfo slogan "All value comes from professional services" will be the secret of its success.

"To provide high quality services, we have always met certification standards like the IT Infrastructure Library and ISO9001," he said.

Wang noted the BOO approach requires a particularly strong service culture because Capinfo bears the risk that clients may drop the service after learning techniques in operating the system or hire lower-priced companies to help with the operation.

"Our enterprise culture is to grow together with customers, learn their businesses and follow their needs," he told China Daily. "Because of high quality service and good reputation, we have not lost one customer so far."