Silicon Valley-based BEA Systems hopes to give China's nascent software export sector a kick-start when the firm opens its first offshore software development laboratory in the mainland next year and starts transferring key technology to developers. Alfred Chuang, BEA's Hong Kong-born founder, chairman and chief executive, said the company intended to shift the research, development and manufacture of one of its major software product lines to the mainland. Financial commitments were not disclosed, but BEA expected to set up a software development lab with up to 200 Chinese developers in the next six months in either Beijing or Shanghai. 'China has proven it can compete with the world on the price of its labour, but that is a market of diminishing returns,' Mr Chuang said. 'Software is the key. China already has its own booming hardware industry, but to create a sustainable, intellectual-property-based economy to compete on an equal basis against the rest of the world China must develop its own software industry.' He said BEA, a maker of software used to create e-business programs in enterprises, could help the mainland build a vast new economy based on Chinese-developed intellectual property. 'We are keen on developing partnerships with various mainland software firms and developers so that BEA technology can be included in their products,' he said. 'China's intellectual-property-based economy has the chance to become the world's best mover in software technology.' With a rash of new government initiatives, including a crackdown on piracy that helped pave the way for the country's admission to the World Trade Organisation, China's software sector is poised for dramatic growth and should become more accessible to foreign players, according to a recent report from the Washington-based Software and Information Industry Association. In its 10th Five-Year Plan that covers 2001 to 2005, China targeted a growth of more than 30 per cent annually for its software and IT industry. That is expected to bring total IT market sales up to nearly US$20 billion by 2005. China also expects to build 20 large software companies with revenues exceeding US$120 million and more than 100 'famous software brands', and to lift software exports from US$1.5 billion to US$2 billion by 2005. Robin Giang, senior analyst at research firm International Data Corp, said: 'BEA's plan has significant international ramifications.' She noted that China favoured foreign firms with deep pockets, key technologies and a patient market strategy that involved helping the mainland improve its expertise in various areas of IT. BEA and its flagship product, WebLogic, provides a software foundation that allows enterprises to develop, integrate and expand their business programs and processes over the Internet to reach suppliers, partners and staff working remotely. Main worldwide competitors include IBM, Oracle and Sun Microsystems. BEA, which expects to reach US$1 billion in worldwide revenues in its latest financial year, recently established a directly owned subsidiary in Beijing, BEA Systems (China), with more than 100 staff.