Deal focus: Huilianyi’s digitization drive

Chinese enterprises, previously beleaguered by paper-based bureaucracy, are being transformed by the adoption of electronic invoices. In 2018, 3.27 billion e-invoices were issued nationwide, up 257% year-over-year. Come 2021 it will be 50 billion according to iiMedia Research, a local research firm.

A recognition of this trend recently encouraged China Renaissance to lead a RMB300 million ($42 million) extended Series C round for Huilianyi, an expense management solutions provider. The company covers the entire expense process, from payment all the way through bookkeeping. It also automatically verifies, stores and files invoices, paper and electronic.

Customers include a large private company with a 40-strong team responsible for cost management and reimbursement. “Half were transferred to other positions after our solution was implemented,” says Changzheng Zhang, Huilianyi’s chairman and CEO.

The enterprise cost management space is populated by three kinds of player. SAP Concur is the dominant international option, favored by multinationals. For companies that want a more localized solution, there are software players Kingdee and Yonyou. However, cost management systems are not a core function and their combined market share is marginal.

That leaves newly-launched start-ups such as Huilianyi and Fenbeitong. The latter, which raised a $36 million extended Series B round last month, has established a front-end payment service with a super app that connects to more than 150 hotel groups, restaurant chains, and travel agencies. The goal is to fully integrate payments with reimbursement, so that an employee doesn’t need to pre-pay.

Zhang is not convinced by this business model. “If there were no Ctrip, Didi, or Meituan-Dianping, an enterprise purchase app would be awesome, but it’s not the case. In addition, a super app might provide better purchase experience for front-end staff, but it is the financial department that decides to implement a SaaS [software-as-a-service] solution. We must solve their pain points first,” he adds.

The new capital will go towards product diversification. The main Huilianyi brand will be used for large corporates, while Super Reimbursement will focus on small and medium-sized enterprises (SMEs). In order to reduce customer acquisition fees in the SME space, Huilianyi has trialed live online broadcasts for dozens of customers instead of one-to-one meetings.

Last year, Huilianyi entered the Japan market, where users favor product quality over the rapid introduction of functions popular in China. Zhang claims this experience led the company to raise standards in its home market as well. Moreover, he stresses the importance of not trying to be all things to all people.

“You must guide customers to use a relatively standard product in a relatively focused area,” Zhang explains. “Developing a customized solution for each company is another dead end.”

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• Topics
• Greater China
• Expansion
• Technology
• Support services
• China
• China Renaissance
• Growth capital