China. It is a commodities powerhouse and certainly a major commodities consumer. Yet, when it comes to CTRM software, it is still in its early stages and experiencing a similar trajectory to the one in the west based on what I heard from Enuit’s Pengcheng Zheng this week. There, Enuit has a local presence that has seen it almost double in size to around 50 people in the last year and is one of very few CTRM vendors to have had success in that market. Pengcheng Zheng would argue that Enuit is the only successful vendor in China, and he may well be right, as it has expanded its client base in 2022 with three huge new entities in chemicals, minerals, and petrochemical and refined products. Enuit now has a sizeable number of licensed users in China, he told me.
When he describes the market for CTRM software to me, it reminds me of how it was in north America a couple of decades ago. Essentially, many businesses with commodities exposure have never heard of CTRM software and instead they have invested in trying to expand their ERP solutions or built homegrown solutions. Others have invested in platforms from Fintech vendors. Both avenues have been characterized with issues and neither has proven to be the right path. We saw that also here a couple of decades ago. Larger businesses built their own solutions or tried to build from their ERP or procured a multi-asset class fintech solution only to end up using spreadsheets for pretty much everything anyway. There are a few domestic CTRM vendors however though he says that they have faced considerable implementation difficulties.
Chinese firms need and are desirous of information on CTRM software, he told me. When they realize they need a new application type – CTRM – that is when Enuit starts to have productive conversations with them. “Other approaches just haven’t been too successful,” he said. The key is education. To that end, Enuit has built a consulting arm by expanding its implementation arm in China and has recently finished two consulting projects in risk management with others on the plate. It has also invested in building a light version of its product with web-based screens called OXALIS for the middle and lower tier Chinese market. “Things are going well. We have had a very successful year,” he said.
“It is an early market that is not quite sure what it needs,” he told me. Users think about supply chain, ETRM and ERP or Commodity Management solutions not knowing which way to go. “Many of the solutions available in China really lack risk management. Support for derivatives and so on.” Meanwhile, Enuit is building a presence and growing its installed base using local staff in local offices. It will be interesting to see how it fared in the 2022 Vendor Perception Study report that will be due out later this year.