The mainland government will change its policies on the purchase of software to make domestic producers more productive and accelerate the development of new products, according to the Ministry of Information Industry (MII). Industry analysts said the move, reported by Xinhua, appeared to be aimed at improving copyright protection and forcing government departments to buy genuine software in a country where many computers run on pirate copies. Fake copies cost software-makers millions of yuan in lost revenue and hinder the growth of the domestic software industry. Xinhua said the State Council had also ordered a change in tax and investment rules for the software industry to be implemented this year, but gave no details. It said these two changes were designed to maintain the rapid growth in domestic software sales, which rose 30 per cent last year to 110 billion yuan (about HK$103.14 billion). Earlier this week, Microsoft, the world's largest software manufacturer, said it had lost money on the mainland for 10 years because of rampant piracy. The China Software Industry Association says 330,000 people work in the industry, including 180,000 technicians. Sales of the big three domestic firms - Founder Group, China Computer Software and Technology Service and Neu-Alpine Software - each exceed one billion yuan a year. But they are a fraction of the country's 5,000 software firms, most of them small, employing fewer than 50 people and not internationally competitive. Exports of software are just 10 per cent of those of India and the design of operating systems has long been dominated by Microsoft's Windows. In August 2001, the MII and the State Development Planning Commission designated 10 national software industrial bases, out of the country's 48 software parks. They are in Beijing, Shanghai, Dalian, Chengdu, Xian, Jinan, Hangzhou, Guangzhou, Changsha and Nanjing, close to universities and software firms. The authorities promised preferential policies, venture capital, support services and help for firms operating there to list.