Firms related to information technologies such as semiconductors, co-processors and software have expanded into China, but the international dominance of American firms does not yet extend to a growing China market. However, the rapid developments of microprocessors and network software means that these new markets are offering potential for growth.
Estimates of Pirated Software: Over 90%
Operating Systems Based on Linux: About 15%
Operating Systems Based on Windows: About 85%
Software Market
Windows leads the operating systems market with Windows 2000, though Linux-based software has made significant inroads. Besides the increased sales of licensed software in the past year due to Y2K compliance purchases, Chinese users appear to be seeking more reliable service offered by licensed products. Replacement of non-compliant software with newly licensed Y2K ready software and with the better service offered by foreign vendors has increased imports. In the past year, Microsoft announced an 83% increase in China revenues.
Intellectual Property Rights (IPR)
The market for licensed software is nonetheless slow in developing. Many Chinese individuals and enterprises are unwilling to pay for licensed software due to financial constraints, the perception that software has no value, and the widespread availability of cheap, pirated software. Government policy and practices may be changing. Chinese companies involved in research, banking, and technology are less willing to purchase pirated software. Currently, pirated software is estimated to comprise over 90% of the market. Chinese companies and software engineers also often see their own software fall victim to IPR violations, which is increasing the pressure for better protection. The long-term solution against piracy lies in mobilizing domestic firms to take the lead in IPR protection.
Semiconductors and Components
Chinese manufacturers currently face a lack of technical know-how. China supports the entrance of foreign firms into the semiconductor and components manufacturing markets, but continuing problems with IPR and difficulties in creating wholly-owned foreign ventures or foreign-controlled joint ventures represent significant barriers to entry. Over 90% of U.S. electronic components used in China are purchased in Hong Kong and brought across the border in Guangdong.
Export Controls
Encrypted software products require export licenses from the either the U.S. Department of Commerce or the State Department. The latest generation of computer microprocessors are so powerful that a single chip powering a personal use PC is almost powerful enough to be rated a High Performance Computer (HPC). HPC's, often called Supercomputers, are subject to more stringent controls.
Key Contacts
Ministry of Information Industries (MII)
Tel: (86-10) 6602-0839
Fax: (86-10) 6601-1370
Website: http://www.mii.gov.cn
MII Dept. of Electronics and IT Products
Tel: (86-10) 6820-8202
Fax: (86-10) 6827-1654
China Software Industry Association
Tel: (86-10) 6253-2559
Fax: (86-10) 6253-2553
United States Information Technology Office (USITO)
Tel: (86-10) 6465-1540
Fax: (86-10) 6465-1543
E-mail: usito@iuol.cn.net
Website: http://www.usito.org
Major Shows/Exhibitions
Semicon China 2005 - 3/15-3/17, Shanghai
U.S. Commercial Service Contact Information in China
Beijing Office:
Tel: (86-10)8529-6655
Fax: (86-10)8529-6558/9
Cameron Werker
Cao Shujuan
Shanghai Office:
Tel: (86-21)6279-7930
Fax: (86-21)6279-7639
Darrel Ching
Lisa Tang
Jane Shen
Guangzhou Office:
Tel: (86-20)8667-4011
Fax: (86-20)8666-6409
Kent Guo
Chengdu Office:
Tel: (86-28)8558-3992
Fax: (86-28)8558-3991
Xu Tao
Shenyang Office:
Tel: (86-24)2322-1198x8142
Fax: (86-24)2322-2206
Liu Yang