More than a month since President Hu Jintao's visit to the United States and to Microsoft headquarters in Redmond, the software giant has been moving fast to make up for lost time in China. A new pact with the central government was forged to drive domestic information technology innovation and bridge the digital divide in rural areas, while a potentially lucrative prepaid computing scheme was launched with computer maker Lenovo Group. Yet the rush to implement new projects on the mainland, where Microsoft has struggled over the past decade, is not likely to outpace the company's hefty investments in India any time soon. In his tour of Asia last week, Microsoft chief executive Steve Ballmer said: 'We have today roughly 2,000 people in China, which is a lot particularly if you compare our revenue in the market.' He pointed out that 'some things are working' on the mainland for Microsoft, 'other things are not working quite as well yet'. Still, he sees the mainland as 'big enough, different enough that we'll take our global strategies and change them quite a bit to make it work in China'. So Microsoft signed a memorandum of understanding with the Ministry of Information Industry (MII) in Beijing last week to support innovation in China's IT and software companies and help close the digital divide between the developed and rural areas. Microsoft plans to increase its software, hardware, talent training and technical support to at least 250 million yuan in the next five years. Lou Qinjian, vice-minister of the MII, said: 'Working with ?Microsoft enables us to learn ?from Microsoft's leadership in technology, management and training.' The deal included the setting up of a clutch of laboratories to be jointly run by the MII and Microsoft. These included a Windows Technology and Platform Lab, an Embedded System and Hardware Platform Lab, a Pervasive Computing Lab, an Applications Incubation Centre and a so-called Solutions Envisions Centre to promote the products developed by those facilities. Over the next five years, the two parties plan to jointly train 1,000 instructors, 20,000 software engineers and another 50,000 IT workers through distance learning. Microsoft will provide customised training and consultancy to three jointly designated software companies in China to help enhance their overall competitiveness in the global market. Microsoft will help these software companies secure software and Windows/.NET-related business opportunities worth as much as 250 million yuan during the next five years. The company will also support the MII's plans to deploy pilot information service centres in at least five rural regions of various levels of economic development. These centres will provide rural communities with information services to help them use IT technology to improve their livelihood. But what the MII official added made such investment all the more worthwhile for Microsoft: 'We will continue to strengthen software intellectual property rights protection to create a healthy environment for the development of the software industry'. 'Certainly we would love to grow our business, but we need some IP protection,' Mr Ballmer said, noting the prevalence of software piracy on the mainland. 'If everything happens, I suspect we'll be many times larger in terms of employment, etcetera, in China five years from now.' With Lenovo, Microsoft announced market trials for pay-as-you-go personal computing, using a model similar to prepaid mobile telephone services. Consumers will be able to buy a Lenovo desktop PC by paying about half its street price up front, and paying the balance over time by buying prepaid cards from Lenovo. By comparison, Microsoft has about 4,000 staff in India, with plans to increase that to 7,000 over the next four years. It also will be investing about US$1.7 billion in the country over the next four years to boost its research and development efforts.
