Microsoft seeks closer ties with Chinese state-owned enterprises

Despite anti-monopoly investigation, tech firm continues push for government-backed products

PUBLISHED : Monday, 14 March, 2016, 11:04pm
UPDATED : Wednesday, 16 March, 2016, 1:51pm

Software giant Microsoft is seeking deeper collaboration with the mainland government as the authorities continue an anti-monopoly investigation into the company.

“Going forward, we want to do everything that we reasonably can to have a portfolio [of products] which address the requirements of this country,” Microsoft greater China chairman and chief executive Ralph Haupter told the South China Morning Post.

“We’ve been here for more than 20 years, and we want to be a partner.”

Haupter said Microsoft was pursuing major initiatives expected to deliver advanced, government-endorsed products for both public and private sector information-technology projects on the mainland.

That would mark a big turnaround for the United States-based company, which remains the target of an anti-monopoly probe by the State Administration for Industry and Commerce (SAIC).

Mainland media reported on Friday that the SAIC was stepping up its investigation of Microsoft for allegedly violating the country’s anti-monopoly law, based on analyses of four terabytes of digital data seized from the company’s various offices. A terabyte is equivalent to 1,000 gigabytes.

READ MORE: Mainland China authorities speed up Microsoft investigations over alleged monopoly

Investigators had initially swooped on Microsoft’s offices in Beijing, Shanghai, Guangzhou and Chengdu to gather data in July 2014. They later visited the office of global technology consultancy Accenture in Dalian, requesting documents related to work that Microsoft outsourced to the company.

“We’re serious about complying with China’s laws, and committed to addressing the SAIC’s questions and concerns,” a Microsoft China spokesman said.

The stakes are high for Microsoft, as well as other foreign hi-tech suppliers, since the mainland is poised to overtake Japan this year as the world’s second-largest market for information technology goods and services, behind the US.

Business and government spending on technology, including telecommunications services, on the mainland is forecast to reach US$224 billion this year, compared with US$203 billion in Japan, according to data from Forrester Research.

Haupter said Microsoft had “found ways to engage in discussion and develop mutual understanding” with the government. “We’re taking a very bold step,” he added.

In September, Microsoft initiated seven new agreements with Chinese companies and government institutions to advance the availability of its products and services on the mainland.

What looks to be the most important among those deals is a partnership between Microsoft and China Electronics Technology Group (CETC), a state-owned hi-tech systems integrator.

READ MORE: Microsoft expands its mobile and cloud services push in Hong Kong

Microsoft and CETC have agreed to support the configuration, deployment and maintenance of localised Windows 10 operating system in so-called specialised fields at the computer networks of government institutions and critical state-owned infrastructure enterprises.

The two sides have formed a joint venture, majority-owned by CETC, that will be registered in the country this month, according to Haupter.

Microsoft has also set up a new cooperation with Unisplendour Corporation, a unit of state-backed Tsinghua Holdings, and mainland data centre operator 21Vianet to provide cloud computing solutions and services to Chinese businesses, especially state-owned enterprises.

Cloud computing enables companies to buy, sell, lease or distribute online a range of software and other digital resources as an on-demand service, just like electricity from a power grid. These resources are kept and managed inside internet-linked data centres.

Haupter said there were more than 60,000 users on Microsoft’s cloud platform on the mainland.