bodyType

customContents

entityId

entityUuid

articlePageQuery

filter

article

articleBaseAdvertisingInfoArticle

articleListArticle

articleSeoArticle

hooksArticleAcknowledgementGateOverlayArticle

hooksTrackPageViewArticle

hooksContentInterestArticle

articleLinkingDataContent

hooksAmpRedirectArticle

articleSchemaContent

liveArticle

advertZone

sentiment

contentLock

topics

types

sections

paywallTypes

createdDate

publishedDate

sponsorType

urlAlias

moreOnThisArticles

commentCount

authorLocations

authors

corrections

displaySlideShow

multimediaEmbed

printHeadline

seriesContainer

articleSpeeches

socialHeadline

headline

images

flag

firstTopic

glossary

flattenTypeIds

image

relatedLinks

relatedNewsletters

__typename

sponsor

pdfFiles

seriesReverseOrder

series

disableOffPlatformContent

published

updatedDate

summary

subHeadline

body

keywords

readingTime

customTimezone

liveContents

Xteam Software, a Linux-based company founded in the mainland in 1999, is to  acquire 68 per cent and the entire share capital of Beijing software developers Astoria Innovations and Wisdom Elite Holdings.

The two companies represent the software arm of Beijing Development, a systems integrator and software developer run by  Beijing municipal government.

Xteam chairman Gary Ma said he was excited about the acquisition.

'The software businesses  handle many government-related projects such as social security for half the population in Beijing as well as [projects for the] labour and tax offices. They have been doing this for a while and so have a great deal of expertise.'

Business conducted by the two companies last year was worth  $55.8 million.

The acquisition will allow Xteam, which is listed on the Growth Enterprise Market, to get more involved in software development.

Mr Ma said Xteam had a lot of experience in building an operating system (OS) but  little experience in developing applications.

'We don't have a business model or customers. They have.'

He said he hoped Xteam and Beijing Development's combined expertise would help both companies grow.

'We provide a kernel. They are not an OS house, so they wanted us to help them do that,' he said.

Xteam investor Petrus Sung, who also advises the company,  said its goal was to make Linux easier for Chinese people to use.

A step in that direction involved making Linux work better  in Chinese.

'We wanted to create a Chinese kernel and then the next step would be to create solutions,' he said.

Red Hat had done the same thing for Linux in the United States, he said, 'so we want to do it for China'.

'We even want to make shell commands in Chinese. The idea is to make the whole thing easier.'

Mr Ma said attempts by large foreign companies to get Linux to work in China had met with mixed results.

'Over the past four years, Intel has been in and out of Linux; and IBM Linux servers have not taken off.'

Foreign investment was not the way to go either, he said.

'In the past, we looked for foreign investment but it was difficult.'

Mr Sung said Chinese programmers had so far contributed little to the open source movement.

'The software community is bright but they do not contribute to the open source model,' he said. 'It is not that they don't want to; it is simply that they don't understand it.'

But there was hope for the future, he said.

'People are changing. You have to figure out a good business model and then it will work.'

Mr Ma said Xteam's acquisition was unusual.

'This is the first case of a GEM-listed company acquiring a company based in the mainland,' he said.

Despite Xteam's close relationship with the Beijing authorities, Mr Ma said there were no plans to ask the local government for funding.

'We are not going to ask for a grant. The government may help you with the keys, but you must go through the door and deliver. One of our jobs is to pick up the pieces and create a sizeable impact on the industry,' he said.

'Over the next five years, I think we can do this. Open source will be the king of the world.'



Xteam  to buy Beijing software builders