Currently, with the Chinese market gradually becoming an important role on the global economic stage, more and more foreign companies are choosing to establish subsidiaries in China. This strategic decision has raised a core issue: how to balance the control needs between the overseas headquarters of foreign enterprises and their subsidiaries in China? To address this issue, building an ecosystem that can complement each other’s strengths has become crucial. On the one hand, such a system must be able to meet the precise control of foreign enterprise headquarters over their subsidiaries in China; On the other hand, it should also give its subsidiaries sufficient autonomy and flexibility to carry out their business in China more effectively. This has gradually made the double-layer ERP architecture the preferred solution for most foreign enterprises. But how should foreign companies balance the choice between traditional dual tier ERP and SAP ERP public cloud dual tier ERP architecture?
Foreign companies often choose to deploy traditional dual tier ERP solutions in the early stages. Specifically, foreign headquarters usually choose solutions from a single ERP supplier, while subsidiaries in China often use ERP products from different suppliers, forming a dual tier ERP environment with multiple suppliers. Although this model can meet basic business needs in the early stages, its limitations are gradually exposed as digital transformation accelerates.
The business needs of the headquarters and subsidiary companies are different (originating from Zhihu)
These limitations are mainly manifested in the following aspects: complex data model integration, asynchronous product upgrades from different ERP suppliers, fragile interconnectivity of business processes, increased business complexity, difficulty in achieving innovation, high cloud migration costs, and insufficient real-time process support. Due to these factors, a dual tier ERP architecture with multiple suppliers often leads to stagnation of business processes and innovation capabilities for foreign enterprises after implementation.
Unlike traditional double-layer ERP, SAP’s double-layer ERP solution solves most pain points through a single supplier model. For example, foreign companies can deploy SAP ERP products at their overseas headquarters, while their subsidiaries in China adopt SAP S/4HANA Cloud based on public cloud operation to achieve unified code and data structure.
This architecture not only highly integrates the business processes of foreign enterprise headquarters and subsidiaries in China, but also ensures that subsidiaries retain their operational autonomy while complying with relevant Chinese regulations. With the in memory computing capabilities of SAP S/4HANA Cloud, foreign enterprises can achieve unprecedented real-time operational capabilities in either a single or dual layer structure.
In summary, the dual tier ERP solution of SAP ERP public cloud provides new opportunities for high integration and business collaboration between foreign enterprise headquarters and their subsidiaries in China, which is significantly superior to the traditional dual tier ERP architecture.
How should foreign executives make decisions in China when facing the choice between traditional dual tier ERP and SAP ERP public cloud? We suggest that you click on the link below to obtain more professional advice and support for various advanced solutions for double-layer ERP and the unified and efficient business operations that SAP ERP public cloud can bring.
This article "Foreign Enterprises in China: Best Practices for Unlocking Double Layer ERP Architecture" by AcloudEAR. We focus on business applications such as cloud ERP.
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