What Drives China’s Top Software Companies? Insights from the 2020 Competitiveness Report

Software and IT Service Enterprise Competitiveness Index

The China Electronic Information Industry Federation published a “Software and Information Technology Service Enterprise Competitiveness Index” based on ten years of industry data, using multi‑dimensional indicators such as scale, efficiency, quality, technology, R&D and social responsibility to reflect the operational status and competitive level of firms.

Five Performance Levels

Using the industry average (100 points) as a benchmark, enterprises are classified into five tiers: Strong (above 120), Relatively Strong (105‑120), Medium (95‑105), Relatively Weak (80‑95) and Weak (below 80).

Key Findings for the Top 100 Companies (2019)

Scale Growth

The top‑100 firms generated a combined software revenue of 1.782 trillion CNY in 2019, a year‑over‑year increase of 17.5%, outpacing the industry average by 2.1 percentage points. Among them, 21 companies exceeded 100 billion CNY, 50 exceeded 50 billion CNY, and all surpassed the 15 billion CNY threshold. Their total profit reached 495 billion CNY, up 13.5% YoY, 3.6 points above the industry average.

Innovation Achievements

R&D spending of the top‑100 reached 317.7 billion CNY, a 25% YoY rise, exceeding the software revenue growth rate by 7.5 points, with an average R&D intensity above 10%. In 2019, these firms registered over 40 000 software copyrights and obtained more than 160 000 patents, of which over 50% were invention patents, driving overall industry technological progress.

Open Cooperation

Leveraging platforms such as G20, APEC, Digital BRICS and the Belt‑and‑Road Initiative, the top‑100 expanded overseas markets and localized operations, achieving software export exceeding 40 billion USD (over 10% of total revenue). More than 30 companies, including Huawei, China Telecom, and Chinasoft International, established overseas branches, R&D centers or subsidiaries. Notably, Tencent and Alibaba entered the global top‑10 enterprise valuations, Huawei ranked among the world’s top‑100 brands, and Alibaba Cloud placed in Gartner’s Global Magic Quadrant.

Support Role

The leading firms propelled the “software‑defined” paradigm, embedding software deeply into industrial R&D, design, manufacturing and operation. In 2019, the CNC adoption rate of key industrial processes reached 50.1% and the penetration of digital design tools hit 70.2%. Software‑driven transformation also reshaped finance, logistics, transportation, culture, tourism and other service sectors, spawning new business models such as sharing, platform and algorithm economies.

Future Outlook and Strategic Emphasis

Entering the “14th Five‑Year Plan”, software will further integrate into all economic and social domains, enhancing its role as an innovation engine. Leading firms are expected to seize strategic opportunities, adopt higher‑quality development models, and contribute to building a manufacturing‑strong and network‑strong nation.

Deputy Minister Wang Zhijun’s Four Priorities

1. Cultivate New Domestic Demand

Promote deep integration of software with production, distribution, and consumption to create new growth points and accelerate digital optimization across sectors.

2. Strengthen Key Software Supply

Accelerate breakthroughs in core technologies, address gaps in foundational and high‑end industrial software, and reinforce strengths in cloud computing, big data, artificial intelligence and 5G.

3. Optimize Industry Environment

Implement supportive policies, upgrade software‑city and software‑park ecosystems, foster open‑source collaboration, and build high‑quality talent pipelines through specialized software colleges.

4. Deepen Open Cooperation

Leverage China’s large market to advance global collaboration in emerging fields such as 5G, AI, big data and blockchain, attracting international innovation resources and enhancing the nation’s role in the global software ecosystem.

(Photo: Deputy Minister Wang Zhijun of the Ministry of Industry and Information Technology)