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Monday, August 13, 2001, updated at 20:55(GMT+8)

China Nurtures Sound Software Environment

The Chinese software industry is expected to speed up its development of a more standardized environment after the State Development Planning Commission (SDPC) and Ministry of Information Industry (MII) jointly named 10 national software industrial bases last month.

The bases lie in 10 major cities of Beijing, Shanghai, Dalian, Chengdu, Xi'an, Jinan, Hangzhou, Guangzhou, Changsha and Nanjing. The decision was made after the two departments examined all of the country's 48 existing software industrial parks.

The move is aimed at motivating the whole country's software industry. The industrial bases are expected to become the country's software development, production, service and export centres.

According to an official document issued by the two departments, all 10 software bases are located next to universities and scientific institutions as well as some major software enterprises.

China's software industry has quickly developed in the past five years. Statistics from the Chinese Software Industry Association shows that software sales income in 1995 was 6.8 billion yuan (US$822 million), and the figure soared to 23.8 billion yuan (US$2.88 billion) in 2000, with an annual average increase of 28 per cent.

To date total software sales income has reached 59.3 billion yuan (US$7.17 billion), including US$400 million in exports. A total of 330,000 people involved in the industry nationwide, including more than 180,000 technicians.

Experts from the Chinese Academy of Sciences say that the industry will rapidly develop in the next five years with the improving macroeconomic environment.

The country's western development strategy, the popularization of home computers, the 7 million Chinese enterprises and hundreds of thousands of schools, all provide a bright future for the software industry.

It is expected software sales volume will hit 31.5 billion yuan (US$3.8 billion) this year, up 34 per cent to 2000. The coverage of the software market among the whole IT industry is expected to grow from 11.3 per cent last year to 12.1 per cent in 2001.

Experts urged Chinese software companies to overcome their current difficulties to catch up with their international competitors.

The software industry has been the core of the information industry. The industry is still very weak in China compared with the country's status as the third largest PC producer in the world.

Last year software exports were only one 10th of that of India, the world's second largest software making country.

According to a document issued by SDPC, most Chinese software enterprises are of small scale, which has greatly hindered their competitiveness. Only 3 per cent of the 5,000 Chinese software enterprises have a workforce of more than 200.

By comparison in India, hundreds of enterprises have more than a 1,000 employees each. The SDPC has called on domestic software makers to enlarge their production scales and develop various ties with foreign software giants.

Experts also say the Chinese software industry must insure its quality and service, by enhancing the engineering and standardization of software making. The CMM (capability maturity model) is presently the most popular international software standard. But only a few Chinese software companies have received the certification. They say CMM is vital for Chinese enterprises to become internationally competitive.

The software industrial bases are expected to help avoid these problems. The SDPC and MII promised to make a series of preferential policies to promote the healthy development of these bases.

The SDPC said the bases would foster a group of the country's pillar software enterprises and help them manufacture key products with high market coverage and individual patent rights.

The State will invest in the bases to establish and support communications networks, software research, infrastructure for software testing and talent cultivation. National support will also be given to promote venture capital investment and the establishment of administrative service systems. The two departments will exercise macro-control over the bases. They will also encourage software enterprises in the 10 industrial bases to become publicly listed.

It is estimated that by 2005 the country's software and information service industry will achieve 250 billion yuan (US$30.23 billion) in domestic sales, accounting for 3 per cent of the world's software sales. More than 20 enterprises have an annual sales volume above 1 billion yuan (US$120 million) each.

Source: China Business Weekly

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The Chinese software industry is expected to speed up its development of a more standardized environment after the State Development Planning Commission (SDPC) and Ministry of Information Industry (MII) jointly named 10 national software industrial bases last month.

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