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Keywords: Computer Aided Engineering (CAE), SaaS, China, Localization, ARC Advisory Group.
Overview
In the past decade or so, China's CAE (Computer Aided Engineering) software market has been dominated by overseas vendors. 
However, the emergence of SaaS CAE software has upended the original business model; the US technology sanctions have reduced orders from the largest supplier, Ansys. Under the guidance of China’s policy, enterprises prefer to use domestic CAE software, all of which will lead to changes in the market. We predict that overseas CAE vendors will enter a "difficult period" while Chinese vendors will see a "bonus period." Related enterprises need to be prepared for these challenges.
Overseas CAE Software Players Dominate the Chinese Market
The dominant position of foreign vendors of CAE software cannot be shaken for the time being. The top three players in China's CAE software are Ansys, Siemens, and Dassault Systèmes, which account for more than 50 percent of the market share.
As far as technology is concerned, foreign vendors have the advantage. Ansys, Siemens, and Dassault Systèmes all have their own CAE software solvers source code. However, the source code that most Chinese vendors use comes from overseas open-source software. It is hard for Chinese vendors to break through the technical barriers in this area quickly.
As far as the business model is concerned, foreign vendors mainly sell their own products directly, while Chinese companies mainly redevelop other overseas vendors' software. The Chinese market has a low degree of recognition for self-developed products by local companies. As a result, overseas vendors currently dominate the Chinese market, and local Chinese suppliers can only substitute for overseas vendors in certain specialized areas, such as the defense industry, government agencies, etc.
The Rise of SaaS CAE Software and Technology Sanctions Bring New Changes
The emergence of SaaS CAE software brings new business models and opens larger markets. Due to the US economic sanctions and China's "localization" strategy, it is expected that the market share of overseas vendors will gradually decline in the future. In the long term, China's CAE market size continues to rise steadily and remains quite dynamic.
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