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SANCTUARY
SOFT
Erik Andrews
Drew Archer
Younae Eom
EXPANSION SITES
China
Germany
REASONS
These markets give Sanctuary Soft best chances for
successful even before acquiring new clients
-
Investors
-
Current Clients
FACTORS
 Growth
in Economy
 Target Market (Banks)
 Workforce
 IT Field
 Restrictive Covenants
 Future
CHINA
Growth in Economy
ECONOMY

GDP has grown by over 10% a year on
average since 2006
ECONOMY CONT.
Economic figures in Sept 2010







CPI Up 3.6%
PP I Up 4.3%
Industrial added value Up 13.3%
FDI Up 6.14%
Fiscal revenue Up 12.1%
Exports Up 25.1%
Imports Up 24.1%
o
Industrial enterprises achieved a profit of $392
billion, a 55 percent growth year-on-year.
o
Sanctuary Soft will have a very good chance at
success because of these promising statistics
PART OF CHINA ECONOMY (FOCUS
CITY)
Gross
Per Capita
Domestic
Cities
GDP
Product
(US$)
(US$ bn)
Guangzhou
134.0
13063.8
Shenzhen
120.6
13642.8
Zhuhai
15.3
10268.2
Foshan
70.8
11849.9
Huizhou
20.7
5251.5
Dongguan
55.3
8322.2
Zhongshan
23.0
9150.7
Jiangmen
19.9
4777.1
Zhaoqing
12.4
3236.5


Value-added
Retail
Exports
Industrial
Sales
(US$
Output (US$
(US$ bn) bn)
bn)
45.7
53.6
37.4
52.9
38.2
162
7.3
6.1
17.8
43.0
21.0
24.6
8.9
7.4
17.2
24.9
5.4
55.2
12.7
8.2
17.7
11.0
8.4
7.9
4.1
4.1
2.1
Many world leading multinationals such as IBM, Intel,
Hitachi, Samsung, Nokia, Sony, General Electric, P&G,
Amway, ICI, Ericsson, Siemens, Panasonic, Bosch, Toshiba,
Sanyo, Nestle, Pepsi, Coca-Cola, Toyota and Mitsubishi have
established their presences in Guangdong.
There are 2595 bank branch offices in Guangzhou. By the end
of 2002, the balance of bank deposits in Guangzhou was
￥749.835 billion Yuan. At present, there are 30 branches
and representative offices of foreign banks in Guangzhou.
TARGET MARKET: BANKS
Four of the worlds ten biggest banks by market
value are now Chinese
DEMAND FOR SECURITY
Security Issues
China ranks second in the world for
hosting phishing attacks, accounting
for 13 percent of the world’s total
phishing websites
In 2004, police pursued 1,350 online
fraud and spam cases.
In the first quarter of 2005, 543 phishing
incidents were identified with 1,361
illegal websites closed by Chinese
authorities.
E-Banking
The Industrial and Commercial Bank of
China (ICBC), has seen extensive
growth in e-banking program recently,
with 12 million customers registered
In October, 2004 CCB had over 10
million new online banking accounts
BANKING
Bank Statistics: 2010





China Everbright Bank surged 71.35 percent year on year to 1.5
billion U.S. Dollars
Bank of Communications, net profit in the first three quarters hit
4.4 billion U.S. dollars, up 28.23 percent year on year
Agricultural Bank of China has 320 has million customers, “more
branches than many Wall Street firms have desks”
Bank of China third-quarter net profit rose 29 percent year on-year
to 4.1 billion dollars
China Merchants Bank profit rose 57.4 percent to 3.07 billion U.S.
dollars
WORKFORCE AND RESTRICTIVE
COVENANTS
Happy Employees = Good Business
WORKFORCE: 813.5 MILLION
About half of the entering
college students are in a hard
science or engineering programs

Can afford to pay Chinese
Workers more money to keep at
Sanctuary Soft
- Chinese worker: On Average
Paid $197 Dollars/Month
- American Worker: On Average
Paid $3940 Dollars/Month

RESTRICTIVE COVENANTS (CHINA)




Top tier highly selective schools’ tuition in China= 16,000 ~
27,000RMB/year ($4500)
Compared to United States, that is approximately $12000 less
per year. To reach out to those who have just quit or laid off in
the recent month, we can poach workers by offering
compensation for their children’s tuition
Since costs of living are generally lower in China, we can offer
more benefits (higher wages, better working times) to attract
more workers to join our workforce and to keep them from
leaving
Going back to previous slides, Chinese workers are generally
more efficient when you offer them benefits; tripling their pay
increases their output up to 5 times
IT FIELD
The IT field in China has as much potential as
any country in the world!
 In 2008, China’s technology field exports reached
over 380 trillion dollars which accounted for 29%
of the world!
 Indian IT Companies: TCS plans to increase its
existing 1,200-employee base by over five times
in the next few years, Infosys will invest $100
million to build a 4,000-professional-strong team.
Wipro, the third-biggest software exporter, will
have around 1,000 professionals in a year’s time.

FUTURE
FUTURE (LONG TERM BENEFITS) CHINA

Some long term benefits for Sanctuary Soft by investing in China include
saving thousands of dollars with lower costs as well as a good opportunity to
expand into one of the best software markets in the world. China's software
industry revenues, January to September 2009
Revenue (RMB bln)
Y-o-y change (%)
Software Products
236.67 ($34.64 billion) 21.1
Software Services
148.3 ($21.71 billion)
28.5
Of Which: Software
Outsourcing
20.7 ($3.03 billion)
47.7
System Integration
Software
157.34 ($23.03 billion) 17.3
Embedded Software
117.87 ($17.25 billion) 15.3
IC Design Software
17.31 ($2.53 billion)
6.5
Software Exports
$10.9 billion
39.4
Of Which: Software
Outsourcing
$1.38 billion
34.2
Industry Total
589.1 ($86.23 billion)
20.3
FUTURE
China's market capitalization will rise to $41
trillion by 2030 from $5 trillion now. That would
make China's stock market the biggest in the
world. U.S. market cap is expected to grow to $34
trillion from $14 trillion over that time
Hourly Labor Costs in Manufacturing (US Dollars)
- 2003 averaged 63 cents while the United States
cost averaged 21 dollars and 97 cents
Average Rate of Building Occupancy (US Dollars)
- In Shanghai’s Pudong district the average rate
per square foot was $68.45 while New York’s
Midtown district had a cost of around $103.43 per
square foot

GERMANY
Economy
ECONOMY
 Even
in the recession years, the German
economy managed to stay stable as the
world sixth largest country in terms of
GDP (2009.)
 4th largest in terms of nominal GDP and
5th largest economy in terms of purchasing
power parity
 Germany is also the hub of global
scientific and technological developments.
ECONOMY (CONT.)


The German economy grew by 2.2% in the three months to
the end of June, its fastest quarterly growth in more than
20 years
Germany’s GDP is extremely high being $3,346,700,000,000
(US Dollars)
ECONOMY (CONT.)
 Germany’s
economy, Europe’s largest, will
expand 3.7 percent this year and 2.2
percent in 2011, that would be the fastest
growth since 1991.
 Increased consumption, investments and
demand for German exports are fuelling
the recovery,
 Germany is out producing its neighbors by
wider and wider margins
FOCUS CITY







Frankfurt (Frankfurt am Main) is the financial
capital of Germany and, along with Paris and London,
one of the major banking and financial centres of
Europe.
Richest city in Europe in terms of GDP per capita
Has the highest concentration of jobs in Germany
The city is home to more than 400 banks and
financial institutions, including the European Central
Bank, which established headquarters in Frankfurt
in 1993.
55,000+ people employed in financial services
Credit institutions, headquarters (229)
Employees of financial activities (73197)
TARGET MARKET
Banks
DEMAND FOR SECURITY




Germany is ranked fourth in the world for being targeted by Trojan
viruses
According to Finjan Inc. cybercriminals used a bank Trojan to siphon
thousands of Euros from more than 6,400 German accounts (2009)
Currently black market criminals are offering to sell details on 21
million German bank accounts
In October, German Telekom reported that thieves had stolen a
storage device containing account information on about 17 million
customers
Banks have had to dramatically increase security because of the rise EBanking
2000- 15.1 million online accounts in total
2006- 35.3 million online accounts in Germany
133% increase
BANK STATISTICS
Germany’s leading bank, Deutsche Bank, entered
new dimensions in 2006: for the first time, its
total assets topped the one-thousand-billion-euro
mark at € 1,126 billion
- Domestic branches 45,467

1999-2004 Total German Growth
Assets: 1,082.5 billion
Capital: 48.8 billion
Deposits: 840 billion

IT FIELD
Germany’s IT services spending is forecast to
reach around US$23.9 billion in 2010, rising to
US$29.9 billion in 2014
 In 2010, German market software sales are
projected by BMI at US$18.8 billion and, despite
the uncertain economic conditions, revenues are
expected to rise to US$21.1 billion in 2014
 Germany’s IT Market is the best in Europe as
well as one of the best in the world!!!

WORKFORCE AND RESTRICTIVE
COVENANTS
WORKFORCE
Germany has the largest population in the
European Union
 The German workforce is highly educated and
they are heavy users of technology. This will help
Sanctuary Soft have a smooth transition from the
U.S. to Germany
 As of 2005, Germany had about 56,000 graduates
in the engineering field, a large percentage were
software engineering, so this will give us a great
advantage in picking employees

RESTRICTIVE COVENANTS
Due to strict German labor laws, companies and
individuals prefer to work with freelancers.
 Most freelancers work with multiple clients and
have lack of skills.
 There is a huge language barrier between
German firms and rest of the world.
 An extension of this language problem is the fact
that most foreign companies do not understand
German culture and the way they work.
 A solution to this problem is that we have to have
a German office with German staff as well as
some of domestic staff who are trained in
German.

FUTURE
FUTURE BENEFITS
Benefits for expanding into Germany include
meeting the needs of our biggest customers so we
would make them happy. Also we would be
located in the world’s 2nd largest market for
software and IT services, which will give us a
large opportunity for growth.
 Also the market for software alone had a value of
$22.7 billion and a projected annual increase of
4.7% in the next five years.
 Also compared to other countries cost of office
space is relatively cheap, being at an average of
$61.46 per square foot between the four major
cities.

CONCLUSION: CHINA
Sanctuary Soft should expand to China because:
o
o
o
o
o
Growing GDP and Economy
Very large and growing bank presence resulting
in more E-banking
Very high number of engineering graduates
Can afford to pay Chinese workers more to keep
at company
Lower expenses due to labor and building costs
CONCLUSION: GERMANY
Reasons for Expansion
 The largest European economy
 Very stable and growing economy
 Leader in global technological developments
 Very high demand for information security and Ebanking
 Largest IT market in Europe
 Please our current client base
SOURCES
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https://www.cia.gov/library/publications/the-worldfactbook/geos/gm.html
http://www.economywatch.com/world_economy/germany/
http://www.frankfurt.de/sixcms/detail.php?id=437171&_ffm
par[_id_inhalt]=719011
http://www.easyexpat.com/en/frankfurt/overview/economy.
htm
http://www.moital.gov.il/cmsTamat/InternalPage.aspx?FRA
MELESS=false&NRNODEGUID={B671A172-B0B9-4A4AB4FFFAF66E5802A9}&NRORIGINALURL=%2FNR%2Fexeres
%2FB378ABA3-4343-4220-A70E699D7F26D7B8.htm%3Fwbc_purpose%3DBas&NRCACHE
HINT=Guest&wbc_purpose=Bas
http://www.universityworldnews.com/article.php?story=201
00123092140506
SOURCES
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http://www.economist.com/research/articlesBySubject/displaystory.cf
m?subjectid=478048&story_id=E1_TGGJPPPP
http://www.economist.com/research/articlesBySubject/displaystory.cf
m?subjectid=478048&story_id=E1_TGVQTGDJ
http://www.asianinfo.org/asianinfo/china/pro-economy.htm
http://www.chinalawandpractice.com/Article/1694198/Channel/9930/T
erminating-Labour-Contracts-Restrictive-Covenants.html
http://news.xinhuanet.com/english2010/indepth/201010/29/c_13581252_2.htm
http://www.economist.com/node/17314578
http://www.economist.com/research/articlesBySubject/displaystor
y.cfm?subjectid=478048&story_id=16847872
SOURCES
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http://www.chinaknowledge.com/Business/CBGdetails.aspx?subchap=
4&content=23
http://tmt.interfaxchina.com/news/2257
http://www.frbsf.org/publications/banking/asiafocus/2010/may.pdf
http://www.marketavenue.cn/upload/articles/ARTICLES_1878.htm
https://www.cia.gov/library/publications/the-worldfactbook/geos/ch.html
https://www.cia.gov/library/publications/the-worldfactbook/geos/gm.html
http://data.worldbank.org/indicator
http://www.reportlinker.com/p0190745/Germany-InformationTechnology-Report-Q2.html
http://community.ca.com/blogs/securityadvisor/archive/2010/07/12/zeu
s-version-3-target-spain-germany-uk-and-usa-banks.aspx
http://www.germanbanks.org/html/12_banks_in_facts_figures/sub_02_betrieb/ban_0503.a
sp