Database demand

Dameng’s founder: Feng Yucai

In early July Shanghai’s STAR Market approved the IPO of China’s first homegrown database firm, Wuhan Dameng. The listing represents another milestone in China’s journey for tech independence.

Databases are the back offices that help to run much of our lives. But the market has been dominated for years by various iterations of Oracle, Microsoft, IBM, AWS and SAP. That said, Chinese companies like Dameng, Renmin University’s KingBase and Tianjin Shenzhou’s Shentong are now starting to catch up – in China at least.

Dameng’s Rmb2.35 billion ($373 million) flotation also marks another new chapter in the career of 78 year-old Feng Yucai, who set the company up in 2000. Feng ranks alongside other older entrepreneurs such as Huawei’s Ren Zhengfei, who stay active in the workplace long after retirement age. The longevity of his career is impressive. Back when he started out in computing at Huazhong University in the mid-1970s, Feng and 12 other students shared a single machine with memory capacity of 256K RAM. That’s the equivalent of 5,000 words of text.

The man he would later seek to emulate was grappling with rather different problems of his own: how to create an efficient database. When British computer scientist Edgar Codd came up with his relational model for representing data in the early 1970s, it was at a time when teams of programmers were needed to write code to retrieve specific information stored on magnetic tape.

Data extraction was expensive. Codd’s breakthrough, when he was working at IBM, was to free up the information by breaking the link with where it was stored. His relationship model (based on data values) paved the way for SQL, the standard language for querying relationship databases that underpins so many of today’s business operations.

Feng founded the first database R&D team in China at Huazhong in the early 1980s. 36Kr reports how he quickly grasped the importance of creating independent databases following a secondment to Wuhan Iron & Steel, where he watched Japanese contractors routinely delete project information to prevent technology transfers. Then in 1998 Feng and his team created the first independently copyrighted database management system based on CRDS (calibration references data system) in China. From the outset, he has tried to avoid creating software with open source tools. “They are as addictive as smoking opium,” he warned. “But there will be a heavy price to pay one day.”

According to Wang Nan, an enterprise software analyst at International Data Corp (IDC), local players like Dameng are picking up market share in China thanks to lower price points for their services and favourable government policies. “Under the dual factors of database technology development and macro policy, the past pattern of China’s relational database market is being broken, and changes are coming,” he predicts.

Dameng is still a minnow in revenue terms compared to companies like Oracle, which earned $15.86 billion in operating income in 2021 (on revenues of around $40 billion). Larry Ellison’s firm – founded in 1977 – recorded more modest sales of Rmb642 million in China. Dameng’s roster of clients also underscores the policy tailwinds in the domestic market, where data security is being prioritised at all levels. Implicitly, that opens the door to domestically-based providers at the expense of their international rivals. Dameng’s long list of customers encompasses government ministries (of Commerce and Foreign Affairs), state owned giants (State Grid), financial institutions (China Construction Bank and China Merchants Bank), exchanges (both the Shanghai and Shenzhen stock exchanges) and regulatory bodies (the National Development Reform Commission and the China Securities Regulatory Commission). “Thanks to policy support, Chinese-made products have evolved from being usable to easy-to-use in recent years,” Yin Yanji, chief analyst at Hua An Securities Research Institute, told CBN.

The market in China for the relational database software in which Dameng specialises grew 35% in the second half of 2021 to $1.6 billion. IDC predicts it will be worth $9.6 billion by 2026.

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