China’s low-code and no-code development market report 2021

More and more Chinese enterprises are choosing to build applications with the help of low-code/no-code development platforms. Therefore, low-code/no-code development platforms have received special attention and quickly stepped into the foreground in China.

Based on this, China’s Hapi Research Institute jointly released this report in conjunction with the Application Software Product Cloud Service Branch of China Software Industry Association and China Software Network, to provide excellent insights based on long-term observations and unique perspectives.

The report presents a panoramic view of the industry profile, technical level, market scale, competitive landscape, and application prospects of the low-code/no-code market, and does a detailed analysis and typical case studies of platform vendors to map the future of the low-code/no-code application prospects and development blueprints, plan the path of enterprise digital evolution.

01 Research Background: Digital transformation through the power of technology is the way to go for businesses, and low-code/no-code development platforms are emerging

With the rapid development of cloud computing, artificial intelligence, big data, 5G and other emerging technologies, the popularity of digital cognition has been catalyzed. More and more enterprises hope to use the power of technology to accelerate the transformation of digital intelligence.

The speed of business innovation is promoted through a more agile and powerful application system. With the arrival of the post-epidemic era, traditional enterprises are striving to reduce costs and increase efficiency. Digitalization is the inevitable trend of enterprise development, while low-code platforms are an indispensable tool for enterprise digitalization.

Compared with traditional development tools, low-code development tools can help enterprises reduce the threshold of system development and maintenance costs. At present, more and more enterprises choose to use the low-code development platform to achieve the internal needs of enterprises.

The low-code platform realizes rapid product creation by dragging and dropping pages, which saves a lot of technical research and development labor, reduces product development time, improves product development efficiency, and can introduce a large number of business personnel to undertake some or even all products’ development work has gradually become an important way for companies to reduce costs and increase efficiency and achieve digitalization.

In this pattern, the low-code/no-code development platforms ushered in the explosive incremental market, the Internet head companies have entered the market, the segmentation of the field of independent companies rising star, the competitive pattern has not yet formed, how the future will integrate development has been widely concerned.

02 Industry Overview: The market is in the transition stage from the initial stage to the growth stage. From the user demand side, it can be divided into four types with eight-core competencies

Outside of China, low-code/no-code technology has been in development for over a decade. As early as the 1980s, the low-code prototype – the fourth-generation programming language appeared. As Forrester proposed the concept of low-code in 2014, Microsoft, AWS and other foreign giants entered the market one after another.

In 2018, Siemens acquired Mendix, a low-code application development company, for 600 million euros. In the same year, the low-code platform OutSystems received 360 million US dollars in financing from KKR and Goldman Sachs, with a valuation of more than 1 billion US dollars, pushing the popularity of low-code applications to a climax. With the entry of more companies, China’s low-code/no-code market has formed a relatively complete system.

The types of existing low-code/no-code platform companies are mainly divided from three dimensions: target population, technology and enterprise nature. According to the target population, it is mainly divided into two categories: low-code and no-code. According to technology, it is model-driven and form-driven. According to the nature of the Chinese enterprises, they are divided into integrated companies and independent companies.

From the perspective of the demand side of enterprises’ digital transformation, Hapi research proposes four types of division for the Chinese market:

The first is scenario application, which mainly focuses on meeting the business scenario application of enterprise digital transformation, and focuses on self-use, which also has the highest demand, accounting for 45.7% of user demand.

The second type is product research and development, which is mainly focused on the development of complex software products or solutions, and the applications developed are focused on other uses, accounting for 37.0%.

Third, platform ecological type, mainly relying on low-code/no-code platform, to provide customers with one-stop application development or product services, accounting for 15.7%.

The fourth is the technology enabling, which refers to the provision of artificial intelligence algorithms, blockchain and other advanced technology plug-ins to reduce the application threshold of advanced technology. Currently, there are relatively few, only 1.7%.

In addition to types, the core competence evaluation system is made for low-code platforms, and the following eight core competencies are sorted out by Hapi research.

From four types of core ability that scene is applied more pay attention to the business scenario and process management capability, product research and development is in the serviceability and industry application, platform ecotype more effective ecosystem management ability construction and application of the technology can assign model focuses on the data model and capacity building of development environment.

Through the investigation of Hapi Research, it is found that Mingdao Cloud has obvious advantages in the aspect of scene application, while Grape City and ClickPaaS have greater advantages in the aspect of product research and development. Seeyon and Kingdee have significant advantages in platform ecological type.

The Chinese low-code/no-code market as a whole is in the transition stage from the introduction phase to the growth phase. The low-code market is slightly more mature in terms of segmentation, and is now in the early stage of the growth phase, while the no-code market is still in the introduction phase.

This is closely related to the time dimension, the low-code market is applied much earlier, Grape City launched the low-code development platform Live Word Grid as early as 2016, after four years of cultivation, the market has entered a period of rapid development, while no-code only started to enter the market in 2019, still in the market introduction period.

In terms of the development cycle of the segment types, the product development type has the highest maturity and is in the second stage of the growth period, mainly because this type of platform provider will highlight the research and development of the underlying technology when laying out a low-code platform to achieve a significant increase in the efficiency of complex product development.

The second is the scene application type, platform ecological type and technology enabling type are still in the introduction stage.

03 Technical level: The technology maturity of the Chinese market is not far behind that of the global market. Data security, interface integration, data model and visualization are the key technologies

From the perspective of technical architecture, it is mainly divided into three layers. The bottom layer is PaaS layer, which mainly provides basic middleware products such as container and micro-service architecture. The second layer is the application layer, which focuses on application construction and integration. The top layer is the business layer, focusing on the coverage of business scenarios, especially small and many flexible application scenarios.

It is found that the key technologies of low-code/no-code platforms are mainly data security, interface integration, data model and visualization. In terms of different types, the business application type pays more attention to visualization technology, while the product development type pays more attention to process management-related technology.

In terms of visualization, Seeyon, Kingdee and Mingdao Cloud are outstanding. In terms of interface integration, Graping City and ClickPaaS are excellent and have a perfect sandbox management system. In the aspect of the data model, Kingdee, Microsoft and Baidu Suda have obvious advantages.

The overall technology maturity of the industry is at a low level, mainly because the overall development cycle of the industry is short, and it is still in the transition stage from import to growth period.

In contrast, the maturity of technology enablers and platform ecotype is slightly higher. Therefore, with more history accumulation, such as Kingdee and Seeyon, the maturity of technology will be higher.

From the perspective of the maturity of core technology, the technology maturity of data security is the highest. Tencent Cloud and Baidu Suda perform better, followed by the data model and interface integration, and Kingdee, ClickPaaS and Grape City have higher technology maturity.

The technology maturity of low-code/no-code platforms in China is only 4.8% different from that of the global market. Among them, in data security, visualization and AI technology and other aspects of the global technology level are basically the same; Relatively speaking, the gap in the degree of integration of advanced technology is the largest, and key improvements should be made.

The low maturity of the low-code platforms resulted in only 34% of the actual effort savings, especially as many software vendors used in-house low-code tools.

Application development with third-party commercial low-code/no-code platforms, such as Grape City, Mingdao Cloud and ClickPaaS can save up to 70% of the workload.

In the process of digital construction, each enterprise uses low-code/no-code platforms to develop 5.2 products annually.

For platforms with good usability and rich scene coverage, such as Grape City, Mingdao Cloud and Seeyon, the number of products developed by their service enterprises using low-code/no-code platforms is more than 6 per year.

04 Market Size in China: With a market size of 1.9 billion yuan and 426,000 users, it will maintain a rapid growth trend in the next five years and has huge development potential

The global low-code market scale will reach $8.4 billion in 2020 and is expected to exceed $10 billion in 2021. Due to the impact of the global epidemic, the compound annual growth rate of the global low-code market is expected to decline and will remain at about 41%. Among them, the Chinese market will be an important incremental market.

With 426,000 low-code/no-code users in China and an estimated 1.64 million people using their own or open-source low-code platforms or tools, this segment will be an important potential market in the future.

From the perspective of user scale, Grape City has the largest number of users. It is the company that launched the low-code platform earlier in China and occupies the first-mover advantage in the market.

From the perspective of user classification, the users of business personnel are nearly 110,000, accounting for 25%, which indicates that low-code/no-code platform promotes a large number of business personnel to enter the field of software development, and the future incremental market is obvious.

Hapi’s research data shows that China’s low-code/no-code market size in 2020 was 1.9 billion yuan, is expected to maintain rapid growth in the next five years, will reach 10 billion in 2024.

The reason why the market growth is so fast is mainly due to the increasing demand for digital transformation of Chinese enterprises, coupled with the entry of platform ecological companies such as Kingdee, Seeyon, Yonyou, Tencent, Baidu, Ali, Inspur, and so on, which will promote the market to usher in a burst period.

From the perspective of segmentation type, the market size of scene application type is the largest, reaching 720 million yuan, followed by platform ecological type, product research and development type, and technology enabling type.

The largest market scale of scenario application is mainly driven by the diversified demand for scenario application development of Chinese enterprises. The development speed of scenario application platform companies such as Mingdao Cloud is fast.

From the segmentation perspective of low-code and no-code, low-code accounted for 86% of the market, and no-code accounted for 14%. This shows that low-code is still the main market segment, no-code market needs to be further cultivated.

05 Competition Pattern: The industry concentration is low. At present, there are three business models and four platform quadrants. With the entry of big players, the competition pattern will change dramatically

From the perspective of industry concentration, the overall industry concentration is at a low level at present, mainly due to the small number of platform vendors, the industry is still in the transition stage of the introduction period and growth period. In the future, as the market matures, the concentration will rise, and the industry will move towards a low concentration oligopoly.

The market share of the top three will decline, but the market concentration of the top ten will continue to rise. The platform ecological companies will complete their layout and occupy their respective advantageous market segments. Some independent “dark horses” will share the vertical market segments with their characteristic products, unique selling points and market segmentation strategies.

From the perspective of supply and demand, the supply ratio of scene application type and product research and development type is significantly smaller than the demand ratio, which indicates that the demand of these two types of platforms is strong, the intensity of competition is small, and the growth rate is fast.

At the present stage, the supply exceeds the demand, especially the platform ecology. With the entry of various giants, the intensity of competition will increase.

From the perspective of low-code/no-code platform competition pattern, it can be divided into four quadrants: star quadrant, Taurus quadrant, potential quadrant and incubation quadrant.

The platform of star quadrant is more outstanding in terms of market performance and product competitiveness, and its technical strength is strong, which has been recognized by the market.

Taurus quadrant platform, on the other hand, has a high market share, has established a stable business model, and can provide stable cash flow.

Platform companies in the potential quadrant have higher product competitiveness. Although their market share is relatively low at the present stage, most of them are just entering the market and have not yet developed, so they have higher growth potential.

The platform vendors in the incubation quadrant are a number of newly established platforms, which have little accumulation in the time period and still need some time to incubate and grow.

There are three main business models for low-code/no-code platforms:

In the mode of vendor → platform vendor → product user, the companies are taken as the starting point, and the platform service object is mainly software product companies. Companies develop their own commercial products based on the platform and sell the products to product users. Service objects to companies, partners, channels, mainly for the main for the large and medium-sized enterprises.

In the mode of product user → platform vendor → application user, product users with digital needs are taken as the starting point, and the platform service object is product users. Product users develop the products they need based on the platform and use them internally. The service object is mainly the product user that has the digital construction demand, it faces the small and medium-sized enterprise mainly, the large enterprise is the auxiliary.

Individual → platform → product user mode, with individual users as the starting point, the platform service object is mainly individual users rather than enterprises. Individual users develop commercial products based on the platform and promote their use to product users. The service object is mainly individual users with development ability, it faces the small and micro enterprises mainly, and medium and large enterprise is auxiliary.

06 Application Prospects: Application development is dominated by mobile terminals, and annual/monthly payments are the most popular. Demand for new technologies in business types is growing significantly, and data security is still the first factor in purchasing decisions

Low-code/no-code platform users are mainly male, post-85, highly educated, technical personnel, Internet industry, middle and high-income, first-tier and second-tier cities.

From the perspective of behavioral preferences, Chinese users have a high willingness to use low-code/no-code platforms, and the average utilization rate is concentrated in the range of [20%,50%]. From the perspective of the distribution of the number of products developed, it is mainly concentrated in 3-5 products.

From the perspective of the initiating departments of product development demand, developers in China have a high willingness to use, up to 86%, and the actual utilization rate is concentrated in the range of 20%-50%. The number of products developed is not very high, mostly 3-5. Because of their higher development efficiency, the number of products developed is higher than the average level of the industry.

The development, operation and management departments initiated the most demands, indicating that the participation of business personnel in product development has become an important trend.

From the perspective of payment model preference, annual/monthly billing is the main method, followed by customized demand billing. Generally, product research and development type prefer annual/monthly billing, while scene application type prefers customized demand billing. One concern is that per-user billing is unpopular with users.

From the perspective of purchasing factors, data security, ease of use, the richness of functions, convenient process management and rich data model are the key factors.

From the perspective of price acceptance, the best price range is [500,5000] yuan/year, with the highest acceptable price of 20,000 yuan. If the price exceeds 20,000 yuan, the purchase intention is low.

According to the survey results, the best price point is 1000 yuan, which shows that the price acceptance of users is low.

From the perspective of application type, the application type developed on low-code/no-code platforms is mainly mobile terminal, which is closely related to the more popular and developed mobile Internet in the Chinese market, while foreign countries are more PC terminal.

Products developed by the low-code/no-code platform are mainly in the data, equipment, co-working and R&D categories. In terms of future demand growth trends, the data warehousing category, advanced technology categories such as artificial intelligence and blockchain, and manufacturing categories all have high scope for demand growth.

From the perspective of industry scenarios, the products developed by low-code/no-code platforms are mainly in the Internet, professional services, retail, finance, manufacturing and education industry scenarios.

From the perspective of subdivision type comparison, scene application type is more used in professional services and manufacturing industries, product research and development type is more prominent in education, cultural tourism and government industries, and platform ecological type is better at Internet, retail, finance, transportation, catering and medical care.

Finally, we have researched and studied 17 different types of Chinese platform providers and outstanding cases, presenting each platform provider’s product application scenarios, core technologies and core competencies, dedicated to providing detailed and outstanding cases for low-code/no-code platform users, discussing future incremental market innovation opportunities and development trends with outstanding companies, and providing outstanding insights based on long-term observations and unique perspectives for industry development.

Source: China Software Website

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