SANCTUARY SOFT

Erik Andrews

Drew Archer

Younae Eom

EXPANSION SITES

China

Germany

REASONS

These markets give Sanctuary Soft best chances for successful even before acquiring new clients

- Investors

- Current Clients

FACTORS

Growth in Economy Target Market (Banks) Workforce IT Field Restrictive Covenants Future

CHINAGrowth in Economy

ECONOMY

GDP has grown by over 10% a year on average since 2006

ECONOMY CONT.Economic figures in Sept 2010 CPI Up 3.6% PP I Up 4.3% Industrial added value Up 13.3% FDI Up 6.14% Fiscal revenue Up 12.1%  Exports Up 25.1% Imports Up 24.1%

o  Industrial enterprises achieved a profit of $392 billion, a 55 percent growth year-on-year.

o Sanctuary Soft will have a very good chance at success because of these promising statistics

    

PART OF CHINA ECONOMY (FOCUS CITY)

Cities

GrossDomesticProduct(US$ bn)

Per CapitaGDP(US$)

Value-addedIndustrialOutput (US$bn)

RetailSales(US$ bn)

Exports(US$bn)

Guangzhou 134.0 13063.8 45.7 53.6 37.4Shenzhen 120.6 13642.8 52.9 38.2 162Zhuhai 15.3 10268.2 7.3 6.1 17.8Foshan 70.8 11849.9 43.0 21.0 24.6Huizhou 20.7 5251.5 8.9 7.4 17.2Dongguan 55.3 8322.2 24.9 5.4 55.2Zhongshan 23.0 9150.7 12.7 8.2 17.7Jiangmen 19.9 4777.1 11.0 8.4 7.9Zhaoqing 12.4 3236.5 4.1 4.1 2.1

Many world leading multinationals such as IBM, Intel, Hitachi, Samsung, Nokia, Sony, General Electric, P&G, Amway, ICI, Ericsson, Siemens, Panasonic, Bosch, Toshiba, Sanyo, Nestle, Pepsi, Coca-Cola, Toyota and Mitsubishi have established their presences in Guangdong. 

There are 2595 bank branch offices in Guangzhou. By the end of 2002, the balance of bank deposits in Guangzhou was ￥ 749.835 billion Yuan. At present, there are 30 branches and representative offices of foreign banks in Guangzhou.

TARGET MARKET: BANKS

Four of the worlds ten biggest banks by market value are now Chinese

DEMAND FOR SECURITYSecurity IssuesChina ranks second in the world for

hosting phishing attacks, accounting for 13 percent of the world’s total phishing websites

In 2004, police pursued 1,350 online fraud and spam cases.

In the first quarter of 2005, 543 phishing incidents were identified with 1,361 illegal websites closed by Chinese authorities.

E-BankingThe Industrial and Commercial Bank

of China (ICBC), has seen extensive growth in e-banking program recently, with 12 million customers registered

In October, 2004 CCB had over 10 million new online banking accounts

BANKINGBank Statistics: 2010 China Everbright Bank surged 71.35 percent year on year to

1.5 billion U.S. Dollars Bank of Communications, net profit in the first three quarters

hit 4.4 billion U.S. dollars, up 28.23 percent year on year Agricultural Bank of China has 320 has million customers,

“more branches than many Wall Street firms have desks” Bank of China third-quarter net profit rose 29 percent year on-

year to 4.1 billion dollars China Merchants Bank profit rose 57.4 percent to 3.07 billion

U.S. dollars

WORKFORCE AND RESTRICTIVE COVENANTS

WORKFORCE: 813.5 MILLION

About half of the entering college students are in a hard science or engineering programs

Can afford to pay Chinese Workers more money to keep at Sanctuary Soft

- Chinese worker: On Average Paid $197 Dollars/Month

- American Worker: On Average Paid $3940 Dollars/Month

RESTRICTIVE COVENANTS (CHINA) Top tier highly selective schools’ tuition in China= 16,000

~ 27,000RMB/year ($4500) Compared to United States, that is approximately $12000

less per year. To reach out to those who have just quit or laid off in the recent month, we can poach workers by offering compensation for their children’s tuition

Since costs of living are generally lower in China, we can offer more benefits (higher wages, better working times) to attract more workers to join our workforce and to keep them from leaving

Going back to previous slides, Chinese workers are generally more efficient when you offer them benefits; tripling their pay increases their output up to 5 times

IT FIELD

The IT field in China has as much potential as any country in the world!

In 2008, China’s technology field exports reached over 380 trillion dollars which accounted for 29% of the world!

Indian IT Companies: TCS plans to increase its existing 1,200-employee base by over five times in the next few years, Infosys will invest $100 million to build a 4,000-professional-strong team. Wipro, the third-biggest software exporter, will have around 1,000 professionals in a year’s time.

FUTURE

FUTURE (LONG TERM BENEFITS) CHINA Some long term benefits for Sanctuary Soft by investing in China

include saving thousands of dollars with lower costs as well as a good opportunity to expand into one of the best software markets in the world. China's software industry revenues, January to September 2009

Revenue (RMB bln)

Y-o-y change (%)

Software Products 236.67 ($34.64 billion)

21.1

Software Services 148.3 ($21.71 billion)

28.5

Of Which: Software Outsourcing

20.7 ($3.03 billion) 47.7

System Integration Software

157.34 ($23.03 billion)

17.3

Embedded Software 117.87 ($17.25 billion)

15.3

IC Design Software 17.31 ($2.53 billion) 6.5

Software Exports $10.9 billion 39.4

Of Which: Software Outsourcing

$1.38 billion 34.2

Industry Total 589.1 ($86.23 billion)

20.3

FUTURE China's market capitalization will rise to $41

trillion by 2030 from $5 trillion now. That would make China's stock market the biggest in the world. U.S. market cap is expected to grow to $34 trillion from $14 trillion over that time

Hourly Labor Costs in Manufacturing (US Dollars)- 2003 averaged 63 cents while the United States

cost averaged 21 dollars and 97 centsAverage Rate of Building Occupancy (US Dollars)- In Shanghai’s Pudong district the average rate

per square foot was $68.45 while New York’s Midtown district had a cost of around $103.43 per square foot

GERMANYEconomy

ECONOMY

Even in the recession years, the German economy managed to stay stable as the world sixth largest country in terms of GDP (2009.)

4th largest in terms of nominal GDP and 5th largest economy in terms of purchasing power parity

Germany is also the hub of global scientific and technological developments.

ECONOMY (CONT.) The German economy grew by 2.2% in the three

months to the end of June, its fastest quarterly growth in more than 20 years

Germany’s GDP is extremely high being $3,346,700,000,000 (US Dollars)

ECONOMY (CONT.)

Germany’s economy, Europe’s largest, will expand 3.7 percent this year and 2.2 percent in 2011, that would be the fastest growth since 1991.

Increased consumption, investments and demand for German exports are fuelling the recovery,

Germany is out producing its neighbors by wider and wider margins

FOCUS CITY Frankfurt (Frankfurt am Main) is the financial

capital of Germany and, along with Paris and London, one of the major banking and financial centres of Europe.

Richest city in Europe in terms of GDP per capita Has the highest concentration of jobs in Germany The city is home to more than 400 banks and

financial institutions, including the European Central Bank, which established headquarters in Frankfurt in 1993.

55,000+ people employed in financial services Credit institutions, headquarters (229) Employees of financial activities (73197)

TARGET MARKETBanks

DEMAND FOR SECURITY Germany is ranked fourth in the world for being targeted by

Trojan viruses According to Finjan Inc. cybercriminals used a bank Trojan to

siphon thousands of Euros from more than 6,400 German accounts (2009)

Currently black market criminals are offering to sell details on 21 million German bank accounts

In October, German Telekom reported that thieves had stolen a storage device containing account information on about 17 million customers

Banks have had to dramatically increase security because of the rise E-Banking

2000- 15.1 million online accounts in total2006- 35.3 million online accounts in Germany

133% increase

BANK STATISTICS Germany’s leading bank, Deutsche Bank,

entered new dimensions in 2006: for the first time, its total assets topped the one-thousand-billion-euro mark at € 1,126 billion

- Domestic branches 45,467

1999-2004 Total German GrowthAssets: 1,082.5 billionCapital: 48.8 billionDeposits: 840 billion

IT FIELD

Germany’s IT services spending is forecast to reach around US$23.9 billion in 2010, rising to US$29.9 billion in 2014

In 2010, German market software sales are projected by BMI at US$18.8 billion and, despite the uncertain economic conditions, revenues are expected to rise to US$21.1 billion in 2014

Germany’s IT Market is the best in Europe as well as one of the best in the world!!!

WORKFORCE AND RESTRICTIVE COVENANTS

WORKFORCE

Germany has the largest population in the European Union

The German workforce is highly educated and they are heavy users of technology. This will help Sanctuary Soft have a smooth transition from the U.S. to Germany

As of 2005, Germany had about 56,000 graduates in the engineering field, a large percentage were software engineering, so this will give us a great advantage in picking employees

RESTRICTIVE COVENANTS Due to strict German labor laws, companies

and individuals prefer to work with freelancers. Most freelancers work with multiple clients and

have lack of skills. There is a huge language barrier between

German firms and rest of the world. An extension of this language problem is the

fact that most foreign companies do not understand German culture and the way they work.

A solution to this problem is that we have to have a German office with German staff as well as some of domestic staff who are trained in German.

FUTURE

FUTURE BENEFITS Benefits for expanding into Germany include

meeting the needs of our biggest customers so we would make them happy. Also we would be located in the world’s 2nd largest market for software and IT services, which will give us a large opportunity for growth.

Also the market for software alone had a value of $22.7 billion and a projected annual increase of 4.7% in the next five years.

Also compared to other countries cost of office space is relatively cheap, being at an average of $61.46 per square foot between the four major cities.

CONCLUSION: CHINA

Sanctuary Soft should expand to China because:

o Growing GDP and Economyo Very large and growing bank presence

resulting in more E-bankingo Very high number of engineering graduateso Can afford to pay Chinese workers more to

keep at companyo Lower expenses due to labor and building

costs

CONCLUSION: GERMANY

Reasons for Expansion The largest European economy Very stable and growing economy Leader in global technological developments Very high demand for information security and

E-banking Largest IT market in Europe Please our current client base

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