As I’ve discussed previously in venerable forum, security-software vendors face unique challenges in trying to crack the potentially lucrative Chinese market.
Notwithstanding those challenges, security-software market leaders such as Symantec, McAfee, and Trend have every intention of pursuing opportunities in China. To do so, they must find the right mix of product offerings (including localization), positioning, pricing, and channel partners.
To succeed in China, though, vendors must commit to China. Responding to that imperative, McAfee said yesterday that it would establish a new wholly owned subsidiary in China.
In Beijing to make the announcement, Dave DeWalt, McAfee’s president and CEO, issued the following statement:
“China offers compelling opportunities for McAfee. China has great potential as a center for manufacturing, research and development for McAfee and is also a significant burgeoning market for our products. McAfee has continuously strengthened its presence in China over the last decade and we are planning to expand our investment in the near term to take full advantage of the opportunities China presents.”
McAfee estimates that its potential addressable market in China will grow from about $390 million in 2009 to $1.09 billion in 2013.
In a press release accompanying the announcement of its new Chinese subsidiary, McAfee explained that its Chinese expansion also would include the following:
• A new call center planned to open in Beijing in February 2010 to service the mid-market segment, particularly in smaller cities across China.
• Additional headcount in functions including sales, sales engineering, marketing, support and research and development (R&D), including a planned doubling of the field sales organization in 2010.
• Recently signed reseller partnerships with both Neusoft and CS&S (China National Software and Services) who have become premier partners for McAfee products in China.
• A partnership with Lenovo to market McAfee VirusScan products through Lenovo retail outlets across China, opening up a significant retail channel for McAfee and contributing to our position as the world’s largest dedicated security technology company. McAfee products ship on more than 50% of the PCs shipped by the top 10 PC OEMs.
• A partnership with Dell to offer China consumers 15 month subscriptions on all their retail and direct systems with a Microsoft Windows preinstalled.
McAfee also plans to strengthen existing partnerships in the Chinese market and to establish new ones. Prior to the announcement, McAfee operations in China included sales, manufacturing of the McAfee Unified Threat Management Firewall, and an R&D team focused on mobile security, localization, and security research.
The cornerstone of this move, though, is the establishment of the wholly owned subsidiary. As DeWalt explained to PCWorld, McAfee’s formation of the subsidiary will give the company greater flexibility and more options relating to its China-based manufacturing and to the regulatory approval of its products.
Those considerations are significant. In China, McAfee not only competes against its traditional rivals, such as the aforementioned Symantec and Trend, but also against domestic Chinese software companies that have benefited from home-field advantage in more ways than one.