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Microsoft to boost presence in China

By Chen Yang (Global Times)

13:28, September 07, 2012

Microsoft Corp plans to recruit 1,000 employees as well as increase investment in research and development (R&D) in China over the next year, a move to strengthen the US company's position in the fast-growing consumer market for software and gadgets, the company's executives said Thursday.

The new hires, 50 percent of whom would be fresh graduates, will be spread across sectors including R&D, sales, marketing and services, Ralph Haupter, CEO for Microsoft's Greater China operation, said in Beijing.

Currently there are about 4,500 employees in Microsoft's China operations. The new employees will take the size of its Chinese workforce close to its Indian workforce of around 5,800 people.

When multinationals such as Motorola and Adidas are scaling down operations or retrenching employees in China, Microsoft's latest move has been hailed as the US software giant's growing confidence in the country's economic prospects, analysts said.

"Despite the slowdown, China is still very important for global IT companies in terms of abundant talents and consumption potential," Feng Lijuan, chief consultant at human resources service provider, told the Global Times Thursday.

"Though labor costs have been rising in China, the average salary for junior positions across the country's IT sector is still lower than that of India," she said.

Microsoft also plans to increase its investment on R&D by 15 percent in China over the next year, and develop more technologies and products specifically for the Chinese market, according to Zhang Yaqin, chairman of the company's Asia-Pacific R&D group. Currently the company spends $500 million every year on R&D in China.

Analysts see Microsoft's new plans as a strategy to lessen the Seattle-based software firm's gap with Apple Inc and Google Inc in China, where iOS and Android operating systems are widely used.

"The upcoming Windows 8 operating system, which spans the PC, tablet, and smartphone markets, will be an opportunity for Microsoft to catch up with its main rivals," Sun Peilin, an analyst at consultancy Analysys International, told the Global Times Thursday.

But he said the software company still needs to deal with rampant piracy in China. In January and July, Microsoft initiated separate lawsuits against Chinese household appliance retailer Gome Electrical Appliances Holdings, consumer electronics market Buynow Co and nine domestic PC distributors for selling computers with counterfeit Windows software.

Others are taking a more downbeat view of Microsoft's business prospects.

The dominance of Microsoft and Intel is waning and will see serious erosion over the next few years in the era of tablets and smartphones, market researcher IHS iSuppli said in a research note published Tuesday.

Microsoft's share of the global operating system market is expected to slip to 33 percent in 2016, down from 44 percent in 2011, according to iSuppli.

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