In recent years, the concept of "Digital China" has gradually spread throughout China, among which electronic signatures have accelerated their implementation in various areas, as an important infrastructure for digital transformation.

According to a regulation published by the State Administration for Market Regulation in March of this year, applicants are allowed to perform electronic signatures or digital signatures through electronic signature tools and channels, including the national unified electronic business license system.

Electronic contracts have been greatly expanded by the re-implementation of relevant policies. Telecommuting has contributed to electronic contracting's success and growth.

1. The rise of electronic signatures: An industry in deepening applications

Recently, a large number of enterprises across the nation were caught off guard by the epidemic's counterattack. During the outbreak of the epidemic in 2020, electronic signing became an invaluable tool in helping companies solve the problem of daily contract signing difficulties.

The e-signature provider "eSign"( E簽寶) offers enterprises an easy way to sign online documents and ensure business continuity.

The market for electronic signatures exceeds CNY ¥10 billion.

According to the data of the Prospective Industry Research Institute, the number of electronic contracts signed in China will reach 55.7 billion in 2020, a year-on-year increase of 99.7%; the electronic signature market scale has exceeded 10 billion, a year-on-year increase of 53.9%. It is expected that the market size will reach 23.5 billion by 2023.

Telecommuting has allowed the e-signature industry in China to grow rapidly.

In recent years, both China's multileveled market structure and the industrial Internet have provided sufficient room for the development of the industry of electronic signatures. From the financial market to many other areas such as cultural tourism, real estate, and medical care, electronic signatures have rapidly spread. The investment institutions Qiming and Shunwei have been racing to raise funds since the year 2020; Tencent and ByteDance have also launched electronic signature applications. As capital ripens, the electronic signature industry has advanced into a mature stage.

2. Structure of China e-sign industry : A hundred flowers bloom

At present, the industry structure is mainly structured into three categories of merchants, Internet giants represented by Tencent and ByteDance; emerging electronic signature SaaS (Software as a Service) vendors represented by eSign(e簽寶); traditional software vendors represented by Shanghai Weaver Network.

The 1st category: Internet giants represented by Tencent and ByteDance

They are also among the most important competitors in the electronic signature market in the future due to their wealth of corporate business resources and wide investment territory.

E-letsign is a document signing platform for businesses and individuals. Beijing JuZhenFenJie Technology Limited (北京矩陣分解廣告有限公司) is 100% owned by ByteDance.

WeChat e-signature app

E-letsign, as an example, is used inside the Oceanengine (the advertising platform of ByteDance), which means that it uses the same underlying architecture as Douyin, Toutiao, etc., which is enough to handle billions of daily active traffic pressure without any downside. Nevertheless, due to manufacturers' relatively late entry in the e-signature business, e-signature implementation lags behind, and there is a short-term gap between emerging e-signature SaaS manufacturers.

The 2nd category: Emerging e-signature SaaS vendors represented by eSign(e簽寶)

Having entered the market early, it has a certain first-mover advantage in terms of technology, qualifications, licenses, etc., as well as an advantage in terms of brand recognition. They have now occupied a larger share of the Chinese market and are gradually asserting their dominance. According to the statistics of Tianyancha(天眼查), the three companies, eSign(e簽寶), Fadada(法大大) and BestSign(上上簽), respectively accounted for 33.85%, 20.50%, and 15.20% of the total market share of 79.58%.

In comparison, however, such enterprises only have limited enterprise business customer resources. As China's e-signature market has a low penetration rate at present, enterprise business users do not accept e-signature technology well, resulting in high customer acquisition costs for manufacturers.

The 3rd category: Traditional software vendors

They can use existing customer resources and existing software ecological synergy capabilities to enter the electronic signature market. They have been in the enterprise merchant market for a long time and have close contact with enterprise merchant customers.

3. The Future of E-Signatures: Diversification Potentials

Orient Securities Research Report stated that DocuSign holds 70% of the market share in the global electronic signature market; Adobe comes in second place with 20%, and SMEs hold 10%.

Compared with overseas markets, the top five manufacturers in China, eSign(e簽寶), CFCA, Beijing Certificate Authority Co., Ltd, QiYueSuo and Fadada, have a market share of nearly 40%, according to the "2021 China Electronic Signature Industry Research Report" released by iiMedia Research.

The Chinese market also exhibits high industry concentrations based on the current scale of services.

Nevertheless, IDC, an international market research organization, said in the "China Electronic Contract Software Market Forecast Report, 2020-2024" that compared with other developed regions in the world, China's electronic contract software market is still in its infancy.

According to IDC statistics, the United States electronic contract market penetration rate is approximately 10%, and according to CCTV market research and Oceanengine's "White Paper on the Development of China's Electronic Contracting Industry", China's electronic contract market penetration rate is 4.1%. IDC predicts that by 2024, the Chinese market will hold 4.7 % of the global electronic contract software market. This means that the future development potential of the Chinese market is huge.

Enterprise merchants in China have a large market capacity, which contributes to this rapid growth. Business customers can improve sales efficiency with electronic signatures, reduce costs, and ensure legal compliance with electronic signatures. Additionally, the huge group of SME also provides sufficient expansion space for the growth of the e-signature market.

Electronic signatures are not limited to the SaaS e-signature market; they are also widely integrated into diversified industrial eco-system chains such as e-certification and digital signature. The current challenges for Chinese e-signature companies, and the key to improve the penetration of China's e-signature market, are how to eliminate the security and privacy concerns of customers, enhance the product variety, and improve technology to better meet the diverse needs of enterprise and merchant customers.

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