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Software market shifting focus
http://www.sina.com.cn 2003/07/22 11:25  Shanghai Daily

  China's growing thirst for computer programs is a real boon for foreign software companies.

  As evidence of this, last year, overseas suppliers accounted for 63.7 percent of the country's total software industry sales.

  In addition, the five largest software suppliers in China were American firms.

  In 2002, sales in the Chinese software market amounted to 34.5 billion yuan (US.15 billion), an increase of 21.1 percent over 2001.

  The top dog in China's software sector is Microsoft which accounted for a 5.23 percent share of the country's market.

  It was followed by IBM with 3.29 percent and Oracle with 2.1 percent.

  Microsoft managed to seal several deals last year which will likely boost its long-term performance in China.

  In 2001, Microsoft was in troubled waters after losing in its bid to supply software to the Beijing municipal government.

  But the world's largest software giant eventually made its mark in China.

  It signed a memorandum of understanding with the then State Development Planning Commission last June, under which it promised to place export orders worth US million of software to Chinese companies from 2003 to 2005.

  In the so-called "Great Wall Project," Microsoft committed to investing at least 200 million yuan into China's education sector, including donation to prominent universities, such as Beijing University, Tsinghua University and Fudan University.

  To better cover China's vast territory and reach clients in remote cities, Microsoft China will invest 500 million yuan within the next three to five years to develop a nationwide technical support network.

  Under this plan, Microsoft aims to tie up with 150 domestic partners and to reach more than 100 cities.

  Microsoft's new strategy is far-reaching.

  Last year's figures show that the government, educational institutes and small and medium-sized companies have emerged as major buyers of its software.

  The traditional mainstay of the software market - companies in the telecom, banking, aviation and energy sectors - have slowed down their application of information technology to their routine work.

  They are now paying more attention to how the technology can improve their workflow rather than buying new software.

  The future bright spots of the software market will be government departments as well as the manufacturing, construction, public health and education industries.

  From 2003 to 2007, compound annual growth rate of both small and medium-sized firms and government departments will likely reach 24 percent.

  The expected growth rate is higher than the Chinese software market's compound annual growth rate of 21.1 percent in the period.

  The total market scale will jump to 89.83 billion yuan in 2007 from 34.5 billion yuan in 2002.




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