Written by / Yang Jianyong

In the domestic enterprise management software market, the rivalry between "Yonyou in the north" and "Kingdee in the south" has garnered significant attention. Amidst the transformative waves of artificial intelligence (AI) and cloud computing, these two prominent enterprise service providers have pivoted towards cloud services.

However, the transformation journey has unfolded differently for Kingdee and Yonyou. Kingdee has enjoyed stable revenue growth and narrowed losses, signaling a favorable business trajectory. Conversely, Yonyou has witnessed a decline in performance and escalating losses, grappling with the challenges of transformation. Notably, Kingdee's market value has now surpassed that of Yonyou.

Currently, Kingdee boasts a market value of HK$53.2 billion (approximately RMB 48.69 billion), whereas Yonyou's market value stands at 44.39 billion yuan. It's worth mentioning that Yonyou's market value once peaked at 170 billion yuan during its heyday, making the current market value somewhat disheartening in comparison.

While the movements in the capital market are influenced by myriad factors, a company's operational capabilities remain paramount. Since 2020, Yonyou has struggled with sluggish growth. Notably, in 2023, it embarked on the largest business organization model upgrade in its history, significantly impacting its performance.

In 2023, Yonyou's revenue amounted to 9.796 billion yuan, marking a year-on-year increase of 5.8%. However, it incurred a loss of 967 million yuan, representing its first annual loss in over 20 years since going public.

The shift from profitability to losses was primarily attributed to the significant costs and expenses incurred during its historic business organization model upgrade. In terms of research and development, the company expanded its R&D technical team. Simultaneously, in market expansion and sales, it increased the number of business consultants and sales personnel, intensifying market promotion efforts.

In 2024, Yonyou's operating conditions worsened, with revenue declining and losses widening. That year, its revenue stood at 9.153 billion yuan, a year-on-year decrease of 6.57%, while its loss reached 2.061 billion yuan, an increase of 1.094 billion yuan compared to the 967 million yuan loss in 2023, representing a 113% expansion in losses.

Regarding revenue, large enterprise customer business, a key segment for Yonyou, accounted for 64% of total revenue but witnessed a decline, directly dragging down overall performance. In 2024, revenue from large enterprise customers amounted to 5.86 billion yuan, a year-on-year decrease of 10%. Meanwhile, medium-sized customers also performed poorly, with revenue declining by 9.7% to 1.25 billion yuan.

A bright spot in revenue growth was Yonyou's subsidiary Changer, focusing on small and micro-enterprises. In 2024, Changer's revenue reached 960 million yuan, a year-on-year increase of 19.7%, with cloud subscription revenue amounting to 656 million yuan, a year-on-year increase of 34%, accounting for 68% of Changer's total revenue. This indicates a successful transition to a cloud subscription business model.

Additionally, due to continued sluggish performance and widening losses, among other factors, Yonyou initiated measures to control its workforce size, optimize its personnel structure, and curtail costs and expenses. In 2024, the number of employees decreased by 3,666 compared to the end of 2023, leading to a corresponding increase in severance payments by 142 million yuan.

Previously, in an attempt to turnaround its difficult situation, Yonyou appointed Dr. Huang Chenhong, former SAP Global Executive Vice President and President of Greater China, as its President in early 2025, hoping he could spearhead the transformation. Interestingly, Huang Chenhong resigned after 85 days in office, with Wang Wenjing resuming her concurrent role as the company's President. The author has previously suggested that Huang Chenhong's long tenure in foreign companies may have posed challenges in adapting to the local environment. Furthermore, being over 60 years old and at retirement age, it was difficult for him to produce immediate results in a company deeply mired in significant losses.

Wang Wenjing's frequent concurrent role as President underscores Yonyou's dual pressures of performance and management instability. Despite Yonyou's efforts to downsize, improve efficiency, optimize its personnel structure, and control costs and expenses, including reducing its workforce by 1,689 individuals in the first quarter of 2025, its revenue has failed to resume growth, and its losses have continued to deteriorate.

In the first quarter of 2025, Yonyou's revenue stood at 1.378 billion yuan, a year-on-year decrease of 21.22%, with a loss of 736 million yuan, representing a 62% expansion in losses. The quarterly report attributed this primarily to the year-on-year decline in contract signing amounts in the fourth quarter of 2024 and January of this year, as well as the accelerated transition of the software business towards a subscription model, which had a short-term negative impact on revenue growth.

Meanwhile, industry competition is intensifying. The rivalry between "Yonyou in the north" and "Kingdee in the south" evokes a martial arts narrative, reminiscent of Northern Qiao Feng and Southern Murong Fu.

Kingdee primarily focuses on the small and medium-sized enterprise market. While consolidating its position in this segment, it has also been steadily expanding into the large enterprise market, leading to stable revenue growth. In 2024, its revenue amounted to 6.256 billion yuan, a year-on-year increase of 10.2%, with a loss of 142 million yuan, narrowing by approximately 32.3% year-on-year. This was primarily due to the gradual realization of economies of scale in its large enterprise business.

Kingdee's gross profit margin continues to improve. During the 2024 performance conference, management expressed confidence in achieving break-even in 2025. This optimism stems from the deepening adoption of the cloud subscription model and enhanced operational efficiency.

Furthermore, driven by AI large models, expenditures on cloud infrastructure services are gradually increasing across sectors. Companies within the cloud ecosystem are poised to benefit from this trend. With the empowerment of AI large models, Yonyou is also anticipated to embrace new opportunities.

Especially this year, the emergence of DeepSeek, renowned for its low training costs, open-source nature, and exceptional performance, has profoundly impacted the global AI industry. Various industries are actively integrating it, rapidly building China's AI ecosystem.

In response to the rapid rise of large models, Yonyou has accelerated its embrace of AI and launched the enterprise service large model YonGPT. Simultaneously, it has integrated with DeepSeek to introduce a batch of enterprise service intelligent agents, aiding customers in realizing the practical application of AI in enterprises and advancing the AI+cloud transformation strategy.

Overall, as a new benchmark for global large models, DeepSeek is poised to reshape the entire large model industry. Various industries are rapidly integrating large model services to enhance their intelligence levels, which will accelerate the application of AI innovations across thousands of industries and propel the rapid development of the domestic AI industry as a whole. This heralds a new era of growth, presenting historic industrial opportunities for Yonyou.

As it assists enterprises in accelerating their digital transformation and innovation, Yonyou's cloud services are set to grow further.

Yang Jianyong, a contributor to Forbes China, expresses his views solely on a personal basis. He is dedicated to providing in-depth insights into cutting-edge technologies such as artificial intelligence, AI large models, the Internet of Things, cloud services, and smart homes.