Virtual Data Room Blog

Virtual Data Room in China: Our experience

01-Apr-2014 08:21:00 / by Di Wu

Virtual_Data_Room_ChinaWe’ve been providing virtual data room services in China since 2008, and we’ve learnt a lot in this time. Here are some of the experiences we’ve gained and our insights into the ways in which the Chinese dataroom market differs from others.

In most world markets, the adoption of the virtual data room services has been driven by their use in mergers and acquisition (M&A) transactions, which usually consist of multiple bidders located across a number of regions. In China, however, the usage of datarooms has been spearheaded by IPOs and only recently have data rooms been adopted for other purposes, such as joint ventures and M&As.

A New Concept in China

Many Chinese businesses still follow older practices than other developed countries. Documents are shared using email, USB drives, FTP or perhaps even physical data rooms. They haven’t been immune to the risks of the digital environment, though, and have begun to realize how important security is for sensitive information. This has led to an increase in the use of document encryption, password protected files or FTP

 servers. The idea of the virtual data room is a new concept, introduced mainly by stock market interactions with listed global companies. After the initial IPO transaction, the facilities remained in place and became useful for a range of functions.

Players in the Market

With the increasing demand from the Chinese market, many of the big virtual data room providers are starting out by appointing small teams based in Hong Kong. However, not all providers are tapping into the potential of the market in mainland China, which is where the core business is located. EthosData has found that our partnership with a leading financial printer coupled with a local team based in mainland China has brought us a unique combination of local knowledge and presence.

The Importance of Local Presence

China is a huge market. Although business is becoming more global, China is still very different. Professionals conduct business in a different way.  This is more so for small and medium companies.  To really serve the market you need to be local.  This means:  

  1. Making the service available in the right platform language:  The Dataroom platform needs to be in Chinese, no question about it.  This includes both traditional and simplified.  If the platform has been translated, it needs to be not only by a translator but by someone who understand the corporate market. 
  2. Having local people serve clients and users.  Ideally, this should be people based in mainland China
  3. Understanding how processes are run in China.  The way that companies manage document and workflow in China is very unique.  It is key that the person providing the dataroom management comes from this background.
  4. Choosing the right name :  This might sound trivial, but having a meaningful local name makes a difference. With the importance attached to issues such as names, having the “right” name will motivate employees to provide the best virtual data room service in the market.

There is a huge potential for virtual data room providers in China but that potential will only be achieved by players that are really local.  

We are fascinated by this market. Please contact us if you would like to discuss!