Microsoft boosts investment after China's piracy pledges

PUBLISHED : Friday, 28 April, 2006, 12:00am
UPDATED : Friday, 28 April, 2006, 12:00am

Microsoft will invest US$200 million in Chinese software firms and guarantee mainland procurement worth US$700 million annually over the next five years, according to a deal it signed with the government's central planning bureau.

The US$3.5 billion of exports will mostly be Xbox computer game hardware produced by mainland-based manufacturers.

The memorandum of understanding with the National Development and Reform Commission comes a week after President Hu Jintao dined with Microsoft chairman Bill Gates en route to his official trip to Washington DC and soon after the mainland made important commitments to combat software piracy.

'We applaud China's efforts to strengthen intellectual property rights protection, which will help lay a solid foundation for the sustainable development of China's information technology industry,' Mr Gates said in a written statement.

In the lead-up to Mr Hu's United States visit, his government pledged to procure only computers preloaded with the legitimate versions of software. The four largest computer makers in the mainland also agreed to preload Microsoft operating systems on machines at the manufacturing stage.

'We've been working on these issues with local companies and government officials basically for the entire time we've been in China - 14 years,' Microsoft chief technology officer Craig Mundie said yesterday in Beijing. 'I think this is a long road, but this is certainly the largest single step that's ever been advanced in this journey in China.'

However, Beijing had yet to make corresponding commitments to combat piracy in other economic sectors, analysts said. 'They haven't gone to Warner Brothers and said they want to bring in US$10 million of movies,' one expert who works closely with the government said. 'Every industry is looking for its own big victory.'

Microsoft first signed an agreement with the reform commission in 2002, pledging US$750 million for strategic investments, education and training, research co-operation and exports of its products produced in the mainland.

It expected to extend a separate agreement with the Ministry of Information Industry in the coming weeks to provide equipment, technical support and training to local research and development laboratories, Mr Mundie said.