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Tough Contest Begins in Chinese Software Market
The battle that has just begun in the domestic software industry is destined to be cruel as there are 2,000 companies from both home and abroad entering the potential market.
A newcomer to the software sector, Langchao Qilu Software Co Ltd, showed strong growth potential as it succeeded in a recent public bids held by the Ministry of Information Industry and became team leader in research and development (R&D) of WAP (wireless application protocol) platforms and network management.
Langchao Qilu Software Co Ltd was established in May by Langchao Group, a leading domestic computer hardware producer, with four other parties. About 260 million yuan (US$31.4 million) was invested in the new firm which has 800 employees.
The software and information service industry achieved a combined revenue of 41.45 billion yuan (US$5.01 billion) in 1999, among which software only accounted for 17.6 billion yuan (US$2.13 billion).
However, software revenue of Langchao Group reached only 100 million yuan (US$12 million), which is not yet 1 per cent of the country's total software output.
Suffering under the software backlash, Langchao has started to reshuffle and strengthen its software power scattered over many different departments, according to Sun Pishu, chairman of Langchao's software subsidiary.
Langchao has established a leading position in hardware with the country's first homemade server and significant market share in the personal computer market.
"But hardware must combine with software to power further development,'' Sun said.
The chairman said the new firm would combine Langchao's software power in telecom, finance, banking, social security and office automation.
Co-operation is one of Langchao Qilu Software's major development strategies. The firm has started co-research projects with domestic research institutes and foreign companies.
At present, 10 famous domestic universities and research institutes as well as three foreign companies have become Langchao partners in software R&D.
In a recent forum, Sun said Langchao is preparing for an "overseas plan'' in which the group would set up research houses and joint venture companies in the highly developed software countries.
"The going overseas plan does not mean Langchao wants to explore the overseas market now,'' Sun explained, "We want to consolidate our leading position domestically via absorbing the most updated technology from other countries.''
The chairman said Langchao would soon set on a rapid growth track via merger and acquisitions with other domestic players and focus on the development of telecom, finance and accounting softwares.
Software Market to Reach RMB$120 Bn Yuan in Five Years
China's 1999 software output value totaled RMB$18.2 bn yuan to show RMB$4.4 bn yuan growth over 1998, or 31.88% increase over the same period of the previous year. Against this there will be a growth of software output value to RMB$20 bn yuan in 2000.
Experts say China's software has been developed with an output value to take 2% of its GDP and a sum total of RMB$120 bn yuan is to be predicted in the coming five years.
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