A recent popular article "China Does Not Need SaaS" listed various reasons why China does not need SaaS from an investor's perspective. The intense views of this article also triggered positive feedback from SaaS practitioners in the industry. Many SaaS entrepreneurs in the circle of friends have also participated in the response.
The original text is as follows
Ideal long-term investing and what actually happens
Due to the outbreak of the epidemic in 2020, most companies were forced to shift to a remote working model. This has led to a surge in demand for cloud-based collaboration and communication tools. During the epidemic, many companies were forced to accelerate digital transformation to adapt to new market and consumer demands.
SaaS software companies can provide solutions through the cloud, making it easier for companies to continue operating and communicating in a remote working environment, so they are favored by investors. Compared with traditional software, the products provided by SaaS companies are easier to sell online, and it is easier for customers to activate services on their own. The solutions provided by SaaS are usually flexible, easy to deploy and customized, and can better meet the needs of enterprises in digital transformation. demand in the process, thereby attracting more customers and investment.
In 2020, the valuation coefficient of SaaS companies - the P/S (market value/revenue) multiple - will have a large increase in 2020, with the market average reaching 16 times. Some star companies, such as the valuation of online conference ZOOM software Even to more than 50 times. In the middle and late stages of the epidemic, the valuation of SaaS has dropped significantly, and the current P/S (market value/revenue) multiple is basically the same as before the epidemic.
At the beginning of the epidemic in 2020, the valuations of SaaS companies in the U.S. stock market fluctuated significantly, which also led to significant fluctuations in investment valuations in China's primary and secondary markets. Although China's SaaS companies are smaller than those in the United States, and there are not many SaaS companies with a single product exceeding US$100 million, investors believe that there is greater room for future growth, so their valuations are usually higher than those in the U.S. public market. Valuation, many SaaS companies are valued at more than 20 times.
Due to the epidemic, the Federal Reserve's release of funds and supply chain restructuring, major economies such as Europe and the United States experienced severe inflation after 2020, and the United States quickly raised interest rates from 0% to 5% in a short period of time. The rapid increase in interest rates caused risk capital to quickly flow back to the United States. At the same time, various other factors have also intensified the withdrawal of venture capital from China's SaaS market, causing capital's valuation of Chinese SaaS companies to shift from a premium to a discount. The valuation coefficient of SaaS companies in the United States has been reduced from 16 times to 7 times, while the valuation coefficient of SaaS companies in China may have dropped from 25 times to less than 5 times.
Investing in an emerging industry in emerging markets is not an easy task. China's SaaS development rules may be very different from those in the United States, and the valuation process will also produce huge fluctuations, which brings strong uncertainty to investors. sex and bumpy sensations.
Stable capital environment for U.S. SaaS companies
Most SaaS in the United States have a very good growth rhythm, and can maintain stable revenue growth even after their revenue exceeds US$100 million or US$1 billion. The picture below is Salesforce's revenue growth chart over the past ten years. It has maintained a growth rate of 20% to 40% almost every year, and has maintained positive operating cash flow for a long time.
The picture below is the revenue growth curve of ServiceNow. In the first few years, it can maintain a growth rate of 50% to 100%, and in the later stages, it can also maintain a stable growth rate of 20% to 40%.
U.S. SaaS companies have been able to deploy in the long term due to a unified market, a large and well-educated user base, and stable investor expectations. This environment helps them focus on cultivating talents, building efficient teams, and deepening technical and business expertise to create a solid foundation for sustainable development. The solid market and investment background enables SaaS companies to expand customers and markets more patiently, invest resources in marketing, sales channels and customer relationships, and provide sufficient funds and time for product upgrades and innovation to optimize user experience and satisfy the market. need.
In this environment, successful SaaS companies often choose mergers and acquisitions or investments to strengthen their market position. With ample funds and resources, they seek and integrate potential innovative companies or technologies to consolidate their industry leadership.
Against the background of stable growth, the global capital structure encourages these companies to rapidly expand international business in overseas markets and obtain more users and revenue sources.
In addition, the prosperity of U.S. SaaS is closely related to the steady growth of the capital market, especially the Nasdaq index. From 1,265 points in 2009 to 16,212 points in 2021, the Nasdaq Index has achieved more than tenfold growth and has maintained a stable trend overall.
Stable capital markets and continued exponential growth have created a good ecosystem for SaaS companies. Investors' optimistic expectations for long-term market growth and high praise for the SaaS industry have enabled these companies to receive more financial support, thereby gaining an advantage in market competition. Steady growth allows companies to launch incentive programs that match performance, which provides teams with stable momentum in the ongoing bull market and enables SaaS companies to compete with Internet giants and traditional large software companies for top talent.
Since the 2008 financial crisis, U.S. capital has shifted from real estate to high-tech investment. At the same time, with the rapid rise of cloud computing infrastructure, U.S. SaaS companies have gained more than ten years of stable growth space. Many innovative companies have thrived and can move forward steadily even when valuations fluctuate.
Take Salesforce's stock price as an example. From 2008 to 2021, it has risen steadily by about 30 times, with few major adjustments during this period. This kind of trend is favored by investors because it is highly predictable, has strong certainty in short, medium and long cycles, has less fluctuations, and facilitates investment decisions and target selection.
Capital market environment for reference for Chinese SaaS companies
From 2008 to 2023, the Hang Seng Index experienced continuous fluctuations, and in 2023 it was even lower than the index at the end of 2009.
Although the Hong Kong market is funded primarily by global investors, most listed companies operate primarily in mainland China. This segregation of funds and assets creates a trust gap between markets, with valuations of the Hang Seng Index often falling below the average of most other global capital markets. Due to the free flow of funds, Hong Kong's capital market is often affected by capital flows from around the world and has been in a low and volatile state for a long time.
Over the past decade or so, the Shanghai Composite Index, which is supported by RMB funds, has experienced significant fluctuations and will remain unchanged from the end of 2009 in 2023.
There are few institutional investors in the A-share market, and they are easily influenced by the sentiments of retail investors. Coupled with the general speculative mentality, the market often experiences ups and downs. Historical A-share bull markets, such as the A-share bull markets in 2007 and 2015, rose rapidly in a short period of time and then fell rapidly, forming a phenomenon of short bulls and long bears. The market lacks an effective short-selling mechanism. When it rises, it rises rapidly and violently, and extremely high valuations are difficult to be corrected by the market in the short term. When it falls, panic selling may intensify volatility.
China's rapid economic growth has led to increased policy volatility in the capital market. The government will launch different control policies according to the economic situation, which will also have a drastic impact on the trend of the stock market.
There are significant differences in the valuations of companies across industries and sizes in A-shares. The valuation of GEM can provide a reference for emerging industries such as software and SaaS. Thanks to abundant funds and high listing thresholds, the valuation of A-share technology companies has long exceeded that of most capital markets around the world.
Chinese software companies with large performance fluctuations
Take Kingdee International, which is listed in Hong Kong, as an example. Before 2011, its annual revenue growth rate was pretty good, basically exceeding 30%. However, there was a five-year adjustment period from 2011 to 2016. Although the Hang Seng Index had a short-lived bull market in 2015, Kingdee International's performance in this bull market was not outstanding, and its stock price only increased less than three times in 2015.
Kingdee International's performance began to resume a 20% growth rate after 2016, and the Hang Seng Index also remained above 25,000 points for a long time from 2017 to 2021. Combined with the optimistic valuation of SaaS software in the US stock market, Kingdee International's The stock price finally experienced a 10-fold increase.
However, due to the violent fluctuations in Hong Kong's capital market after 2020, Kingdee International's stock price has experienced a 75% correction after 2021.
Kingdee International's price-to-sales ratio also fluctuates greatly. It dropped from a price-to-sales ratio of nearly 30 times in 2007 to less than 5 times in 2014, and gradually rose back to more than 25 times in 2021.
If we use UFIDA, which was listed on the A-share market, as an example, UFIDA maintained high growth before 2011; but it also entered a bottleneck period of growth between 2012 and 2016; it resumed its growth between 2016 and 2018. growth; it has entered a low growth stage again after 2019.
Since A-shares were a bull market from 2014 to 2015, UFIDA’s market value performed very well even when revenue growth was not much. The price-to-sales ratio rose from about 2 times the lowest in 2012 to the highest in 2015. About 20 times. The sharp fluctuations in the capital market caused UFIDA's stock price to experience an 80% correction in the cycle from mid-2015 to mid-2017. In A-shares, there will not only be overall bullish short and bearish long trends, but also inconsistent market trends in different sectors. In some years, funds may concentrate leaving some industries in the adjustment period and flock into other industries with greater certainty of growth. industry.
Kingdee International and UFIDA are still general-purpose software and are relatively less affected by the valuation of specific industries. Software companies in vertical industries may experience greater fluctuations in performance and valuation. For example, Hundsun Electronics, which is deeply involved in the securities and fund industries, saw its price-to-sales ratio rise from 5.7 times to More than 70 times.
The development of software companies requires a stable capital environment
In the past decade or so, many big bull stocks related to hardware have emerged in China, especially supply chain companies related to Apple mobile phones, such as Goertek, Luxshare Precision, Sunny Optical, etc. The scale of single products in the hardware market is large, making it easier to copy. The market iteration cycle is fast, and the winner almost takes all. This allows excellent companies to stand out quickly. Compared with the hardware industry, the development of software companies requires a longer and more stable capital environment and investor expectations.
1. Building product competitiveness and organizational capabilities requires spanning a time period
The creation of SaaS products is different from ordinary projects. It requires the team to discover more universal commonalities from customer needs and abstract them into products to solve the current problems of most customers and adapt to changes in the next few years. However, all walks of life in China are still developing rapidly, and customers' demands for digitalization are at different stages. The industry may undergo major changes and new demands every few years. For example, due to fluctuations in the birth population and the impact of policies, the education industry has undergone great changes in the past few years.
At the same time, the cloud computing infrastructure and other SaaS product portfolios that SaaS relies on are also developing rapidly, which may require major changes in product and technical architecture every few years. For example, because most enterprise-level single-product applications were built on the .Net technology system between 2000 and 2010, the architecture of many SaaS products established before 2015 also evolved from the .Net technology system. However, since 2015, China's cloud computing architecture has come more from the Internet's Java system and low-cost Linux architecture system, and those technical teams who understand multi-tenant, high concurrency and high availability mostly come from Internet companies, which has led to many traditional SaaS software vendors have had to carry out drastic architecture migration work in the past few years.
In the European and American markets, public cloud has become the mainstream technical architecture, enough to cover 80% of customer needs. However, in China, there has always been controversy over public cloud, private cloud and hybrid cloud, and the development path of cloud computing is quite tortuous; even in the public cloud market, the competitive landscape has been changing, which undoubtedly brings challenges to SaaS architecture planning. Here comes the challenge.
The marketing, sales, channels, delivery, products and technology systems faced by software companies need to support each other, and the development of each link is affected and restricted by other links. These links are all composed of teams and different people, and the combat effectiveness of a team often takes several years of running-in. Taking into account the interaction of these different links, it may take longer.
SaaS companies face more complex situations in China and need to flexibly respond to changing market and technical requirements. Through continuous iteration and integration, companies can gradually form more mature products and teams, improve combat effectiveness, and respond to competition and market challenges. Every iteration and run-in, every adjustment and optimization of the organizational structure may bring fluctuations in the company's performance and market competitiveness. Investors need to use more dimensions and more patience to judge whether a SaaS product and enterprise is more competitive in the market, not just based on revenue growth.
2. The integration and clearing of the industry also requires a stable valuation system and capital environment
Since the labor costs of Chinese software companies are lower than those in Europe and the United States, and their debt leverage is not high, many product-oriented companies facing operating pressure can maintain operations by turning to project or outsourcing business models. Therefore, we rarely see software companies choose to shut down proactively. In China, the enterprise software market has long been characterized by industry and regional fragmentation. Even a single customer can support a large number of small companies; most of the leading software companies remain large but not strong.
Fluctuations in capital market valuations are a major challenge for investors and companies. In times of severe volatility, it is very difficult to determine whether differences in corporate market value are based on core competitiveness or short-term market fluctuations. This ambiguity hinders market entities from understanding the true value of enterprises, and also allows small SaaS companies, especially small SaaS companies, to misjudge their competitive position, which in turn affects the mergers and acquisitions of companies interested in integrating resources and improving market competitiveness.
The software industry, as part of the high-tech sector, has particularly significant fluctuations in valuations. When the market experiences huge fluctuations, many companies tend to value themselves at the highest point, which may lead to excessive prices during M&A negotiations, thereby increasing the complexity of market integration. If most companies overestimate their value, successful M&A deals will become even rarer.
The capital market's "bullish short and bearish long" characteristics further complicate corporate M&A activities. In this environment, leading companies often find it difficult to seize the best opportunities for mergers and acquisitions. For listed software companies, they may choose to raise M&A funds through the issuance of additional shares in the capital market during a period when valuations appear to be high, using this strategy to expand rapidly without relying on the slow accumulation of cash flow from operating activities. However, a complete M&A project usually takes half a year to a year. Therefore, companies must keenly grasp the high points of the market and prepare for M&A in advance. For such a difficult prediction, the probability of success is too low for a capital market with a "short-term outlook".
However, if the acquired company often has doubts about the sustainability of the current valuation, they may conservatively judge their possible future earnings based on the average market valuation or even the lowest valuation in the past few years. Due to the "bull short and bear long" trend and the sharp fluctuations in market valuations, it is difficult for listed companies and acquired companies to reach an agreement on valuation. In addition, if the capital market sets too strict policies on additional issuance of shares, or imposes strict gambling terms on mergers and acquisitions, this will also restrict the merger and acquisition strategies of listed companies.
When the pace of mergers, acquisitions and liquidations in an industry is blocked, vicious competition and "involution" may intensify. This excessive internal competition may weaken the company's survival prospects and long-term stability, thereby affecting future business and revenue expectations, reducing the attractiveness of the entire industry, thereby further reducing the industry's valuation.
3. The development window period for SaaS challengers also requires the constraints of mature capital markets
The challenges facing the development of China's SaaS industry far exceed those in Western markets, especially compared with the United States. In the United States, many ToC Internet giants, such as Facebook and Google, have rarely set foot in the ToB SaaS field despite their strong technical capabilities. On the one hand, these companies lack enterprise-oriented genes; on the other hand, the supervision and expectations of Wall Street investors have formed certain constraints on them, and they often have a conservative attitude toward projects that do not meet Internet revenue expectations. This conservatism has instead created a relatively clean space for survival and development for the SaaS industry.
For traditional software companies that have been in the market for many years, their operations and decision-making are often constrained by the solidified traditional software business model. Most of these companies have been turned to professional managers for management, and professional managers are more likely to face capital constraints. It is difficult to make revolutionary changes. This deep-rooted traditional model makes it difficult for these companies to adapt quickly when facing SaaS transformation. Although these traditional software companies may choose to enter the SaaS market through mergers and acquisitions, since the operation and management model of SaaS is quite different from traditional software, simple mergers and acquisitions cannot really bring real lethality to those pure SaaS companies. .
However, in China's SaaS ecosystem, we have witnessed a completely different situation. Many traditional Chinese software companies are still under the control of their founders, which gives them strong resource support and decision-making flexibility. This flexibility allows these companies to quickly adjust their strategies and conduct strategic layout and market attacks against emerging SaaS companies.
More importantly, many of China's Internet giants are mostly listed in the United States or Hong Kong. Due to differences in geography, culture and regulatory environment, it is difficult for global investors to have a deep understanding and understanding of their non-core business expansion in the ToB field. Effective supervision. This provides these giants with an opportunity to deepen and expand in the SaaS field of ToB in the long term. For example, Tencent’s WeChat Enterprise, ByteDance’s Feishu and Alibaba’s DingTalk have all become major competitors in the SaaS field. If these super APPs continue to be free and fail to cultivate users' paying habits, other related SaaS products will also be affected, and this cycle may last as long as three to five years. The entry of these companies makes the development path of China's SaaS industry look more tortuous and bumpy.
4. SaaS team incentives and talent gathering require Manniu’s capital market
In 2019, the software industry was shocked by a major news: SAP CEO Bill McDermott announced his resignation. He chose to leave the enterprise software leader with annual revenue of more than 20 billion US dollars and moved to ServiceNow, which had less than 40 billion US dollars in revenue at the time. Billion dollar SaaS business. Bill has worked for SAP for 17 years, 10 of which were as CEO, and witnessed and led the company's multiple mergers and acquisitions and rapid growth. Under his leadership, SAP's market capitalization quadrupled to a staggering $140 billion, while sales and profits also grew significantly.
In 2018, Bill McDermott's total compensation at SAP was as high as US$12 million. What conditions would make such a famous CEO willing to go to a smaller company? The 2021 ServiceNow annual report shows that Bill McDermott's total compensation in 2021 will be as high as US$165 million, an increase of 560% over the previous year, of which equity incentive income related to performance growth and market value growth will be as high as US$162 million. This reflects a trend: SaaS companies, due to their stable and rapid growth, are able to offer more attractive incentive plans, thus attracting the industry's top executives and technical talents.
ServiceNow's revenue in 2019 was US$3.46 billion and its market value was US$57.6 billion; its revenue at the end of 2021 was US$5.9 billion and its market value was US$132.6 billion; ServiceNow's market-to-sales ratio in 2021 is as high as 22.7 times, with average annual revenue The growth rate is stable at 30%. SAP's revenue in 2019 was US$27.55 billion, US$27.338 billion in 2020, and US$27.84 billion in 2021. Due to the impact of the epidemic, large-scale ERP projects may have encountered certain challenges, and revenue has hardly grown in three years. The market value of companies also fluctuates within a narrow range between US$120 billion and US$180 billion.
The subscription fee model adopted by SaaS companies ensures a stable and predictable revenue stream, which greatly enhances the company's financial stability. This stability not only allows SaaS companies to develop long-term strategies, it also makes long-term employee incentive programs possible. Currently, the SaaS market is still expanding rapidly, and many SaaS companies are competing to capture a larger market share and customer base. Such growth makes the potential appreciation of the company's stock a powerful incentive for executives and employees. More importantly, once a SaaS product is developed and successfully introduced to the market, or a new product line is successfully acquired, its marginal cost will be significantly reduced when adding new customers, which further amplifies the SaaS company's profitability and provides higher Inspiring possibilities.
In the context of a steady and continuously rising capital market, SaaS companies can develop equity incentive plans that are acceptable to the capital market due to their high valuation coefficients, rapid revenue growth and predictable profit expectations. Compared with the traditional software industry, SaaS growth and incentive plans are easier to implement.
In comparison, traditional software companies often face a larger growth base, making it difficult for them to achieve sustained high-speed growth. If these companies only develop mediocre equity incentive plans, the shareholder returns they bring may not match the market average, making it difficult to obtain approval. In addition, if high-growth goals are set for three years or longer, it will be equally challenging for the management team to achieve these goals, making it difficult to expect generous incentive returns.
In a capital market where bulls are short and bears are long, it is difficult for Chinese SaaS or software companies to accurately match their business cycles with the cycles of the capital market. In the bull market stage, regardless of the operating performance of companies, their market value may be enlarged; but in a long-term bear market or volatile market, even if the company achieves significant performance, the market value may not have a significant response. This may result in some excellent managers not receiving due rewards during their leadership period, while successors with mediocre abilities can benefit from a relatively relaxed environment.
In China's SaaS industry, competition for talent faces double pressure. First of all, emerging SaaS companies are difficult to compete with traditional large software companies in terms of organizational capabilities and resources due to their relatively short establishment time. Interestingly, in the software world, there seems to be a correlation between a company's valuation level and the square of its employee output. The reason behind this may be that when high-quality talents gather together, the company may transcend the traditional repetitive project-based development method, screen and extract outstanding products and architecture systems, and form a lasting competitive advantage.
The employee output value of many software companies remains at 300,000 to 500,000 yuan, while only a few outstanding companies can reach or exceed the per capita standard of 500,000 yuan. Among China's listed software companies, companies with employee output values of more than 500,000 yuan, such as Glodon, Kingsoft Office and Hundsun Electronics, often have excellent talent teams and high valuation levels. However, it seems that China's SaaS companies have not yet clearly surpassed traditional software companies in terms of employee output value and salary, making it difficult to form a differentiated competitive advantage.
Secondly, the SaaS field has high requirements for technology and products, which makes the talents trained by these companies easily favored by large Internet companies. In view of the high production value of the Internet field and the monopoly of its platforms, the salaries of grassroots employees of many large Internet companies may even exceed the core teams or senior management of SaaS companies. Therefore, many talented teams often feel torn when considering whether to stick to starting a business in the SaaS industry or join a large Internet company to gain more resources and be more likely to succeed.
5. Resonance between mature entrepreneurial teams and mature capital markets
The founders of many SaaS companies in the United States are second-time entrepreneurs or even multiple entrepreneurs, and many of their senior management teams have extensive experience in the software industry. For example, the aforementioned ServiceNow invited the CEO of the famous SAP to run the company.
Before starting his own business, the founder of Zoom successfully grew WebEx from a mere 10 engineers to more than 800, grew revenue from 0 to more than $800 million, and was acquired by Cisco.
Serial entrepreneur and human resources "big brother" David Duffield has successively founded Integral Systems, PeopleSoft, and Workday. Each time he quickly occupied the top position in the market, this is inseparable from him and his team. Decades of deep insights into the field of HR.
After graduating from university, Marc Benioff, the founder of Salesforce, joined Oracle, the world's largest enterprise software company at the time, with his excellent technical background. He started from the grassroots telephone customer service and sales, and "conquered cities and territories" all the way until he was promoted to Oracle. Senior Vice President of the company, he was only 25 years old. After Marc Benioff left Oracle to found Salesforce, he also received strong support from Oracle founder Larry Ellison.
In the U.S. market, the leaders of many SaaS companies have rich industry experience. They have not only accumulated valuable management and M&A experience in large software companies, but also have in-depth interactions with the capital market. When these entrepreneurs began to get involved in entrepreneurship, the European and American capital markets were already very familiar with the software field; at the same time, there were also a large number of senior talents and mature teams in the industry, which could be quickly combined to form combat effectiveness. These senior entrepreneurs and capital operation experts not only have a profound background in technology and management, but are also proficient in how to match the company's operating rhythm with the expectations of the capital market, ensuring that the company's development strategy is synchronized with market dynamics, so as to achieve smooth , efficient and precise strategy execution.
In the U.S. SaaS field, due to its mature founder team, excellent talent system and stable capital market, leading companies can operate at a high speed and steadily, quickly develop and lead the market. The combination of experienced drivers, a great racing team and a flat, clear track is perfect for racing those high-horsepower sports cars in the United States.
However, China's SaaS market is significantly different from that of the United States. In this land, most SaaS entrepreneurs are in their first entrepreneurial journey and have relatively little experience interacting with M&A funds and secondary markets. Even those entrepreneurs who have accumulated a lot of experience or received business school training still feel at a loss when facing China's volatile capital market.
The volatility of China's capital market also poses challenges to the stable development of enterprises. Moreover, diversified valuation systems, such as the valuation standards of traditional software, the valuation standards of pseudo-technology companies that adopt new concepts, and the valuation standards of the Internet industry, often cause cognitive problems to SaaS software entrepreneurial teams. impact. In such a market environment, companies have different coping strategies: some companies are like kites, swinging with the wind of the capital market and may lose themselves in the long term; while others are like ostriches, choosing to keep a distance from the capital market and focus on It relies on its own business development, but without the leverage of capital, development may become slow.
Most of our enterprise software is still at the project system level. Even for leading enterprises, their per-capita performance is almost the same as that of ordinary enterprises. There are not many companies that can truly develop competitive products, and the market lacks talents and teams with product capabilities. For companies that have transformed from traditional software companies to SaaS, their thinking is still constrained by the project system and it is difficult to promote business and product development in new ways.
Due to resource and condition constraints, many successful SaaS companies in China have chosen business-based SaaS, taking advantage of its rapid advancement characteristics to accelerate business development. However, the challenges faced by SaaS teams that are deeply involved in management and product categories are more complex. They not only need more in-depth experience and time to accumulate, but also need to maintain a more stable development rhythm and the understanding from long-term stable capital.
China's SaaS entrepreneurs have diverse backgrounds - from the Internet field to vertical industries to foreign software teams, but relatively speaking, they lack comprehensive management experience in large listed software companies. Compared with American SaaS teams, they may have gaps in technology, business and capital management. Compared with the high-powered sports car track in the U.S. SaaS market, China's SaaS market is more like a mountain bike race. New runners face a rugged road and without the guidance of an experienced navigator, the route ahead is full of uncertainty.
Manniu may be a better opportunity period for software companies
China's economy has gradually shifted from rapid development in the past to stable growth, and China's GDP growth rate may no longer exceed 8% as it did in the past. Although rapid development has brought significant economic scale to China, long-term and violent capital market fluctuations are not the most ideal development environment for the software industry, especially SaaS companies. However, as the overall economic growth slows down, companies will pay more attention to refined management and steady development, and have greater demand for excellent digital products. This will make it easier for truly powerful SaaS industry leaders to highlight and stabilize their market. status.
Judging from the experience of the United States, although its GDP growth rate has basically stabilized below 4% after 2000, and has been approaching 2% for a long time, this has not hindered the rapid rise of many technology giants from 2008 to 2021, especially in the SaaS field. . This shows that in a relatively slow economic environment, SaaS and other software companies can obtain good development opportunities.
As China's GDP growth enters a stable period, the stable economic and capital environment may bring more development opportunities to the software and SaaS industries. In this context, China's software industry will face more mergers, acquisitions and integration opportunities, have a richer talent pool, and enjoy a more orderly competitive environment.