China's software market grew 23.9 per cent last year to 28.5 billion yuan (about HK$26.7 billion) and will continue growing at about the same pace during the next few years, according to a government-backed information technology consultancy. This growth was against a backdrop of lower spending globally on information technology and came despite China's reputation for software piracy. Beijing-based CCID Consulting said China's software market last year was characterised by strong competition from domestic and foreign entrants, an increasing emphasis on services and a sharp increase in spending on security software. Sales of network security products rose 61.8 per cent, more than any other category, with Beijing Topsec emerging the most popular domestic maker, the consultancy said. 'The joint effect of the May 1 battle between Chinese and American hackers, outbreaks of Code Red and Nimda virus and the [September 11] terrorist attacks expedited the rising concern about network security last year,' CCID said. Demand for applications software remained strong. At 18.3 billion yuan, sales accounted for more than half the total last year. Platform software accounted for about 8.6 billion yuan and middleware the remainder, CCID said. Some of the increased sales could be attributed to a continuing government campaign to have its offices replace unlicensed software with licensed packages. CCID said domestic brands held their own last year against the many foreign software makers that had begun to target the Chinese market. These included Ufsoft, Newgrand, Start, Kingsoft WPS Office, Red Office and Evermore Office. However, fierce competition and sales erosion from piracy led to strong interest from Chinese software makers in exporting their products to other markets. For this year, CCID forecast total software sales of 35.7 billion yuan, with strong growth for business-management and electronic-commerce software, and for embedded solutions in network appliances and routers. The consultancy saw potential growth for firms catering for small and medium-sized businesses in China. Only half these companies had computers and only 4 per cent had information-technology (IT) projects under way, CCID said. A report from the United States-based IT consultancy Accenture warned Asia's companies and governments that slowing their electronic-commerce investments would put them in danger of falling behind the rest of the world. Electronic commerce sales in the Asia-Pacific, excluding Japan, were expected to rise from US$200 billion this year to US$599.6 billion by 2004, Accenture said. Business customers would be the most lucrative segment of the wireless market. To sell to corporate customers, carriers should team up with 'well-heeled and specialist partners to develop specific enterprise applications', the report recommended. Across six locations surveyed - South Korea, China, Taiwan, Hong Kong, Singapore and Malaysia - 71 per cent of respondents said they would keep spending on e-commerce, despite the decline in the tech sector. About 29 per cent said they were putting e-commerce plans on hold. About 75 per cent said governments should introduce laws and guidelines for e-commerce, 30 per cent said better infrastructure was needed and 16 per cent sought tax incentives for e-commerce.