Business

An official of Microsoft said here on Friday that the company would take a more flexible pricing strategy in China to allow more users to afford genuine software.

Lin Congwu, a marketing manager of Microsoft China, thanked the National Copyright Administration for publicly expressing “understanding and support” for the company’s anti-piracy efforts.

According to him, Microsoft would actively consider the pricing suggestion of Chinese consumers.

“There is no doubt about whether piracy is right or not. But we can discuss whether software is expensive or not,” Lin added.

On Monday, the administration’s vice-director Yan Xiaohong said the administration “understands and supports the rights-safeguarding move taken by institutions including Microsoft.” However, he pointed out that Microsoft should “pay attention to the methods.”

The Microsoft Genuine Advantage (MGA) validation testing software already operates in other countries and regions and Microsoft was surprised by the reaction in China, said Microsoft at a press meeting Oct. 27, 2008.

Microsoft launched the “Windows Genuine Advantage” (WGA) and “Office Genuine Advantage” (OGA) tools last week to test the legitimacy of the software in China’s computers. Those whose software failed the tests would see a black desktop or a permanent warning of pirated Office software.

Although the company said it would not collect personal information with the tools, which would not affect computer use, controversy over the move has escalated.

The headline-hitting incident also triggered online surveys on almost every major portal website in China. The majority of respondents said they were unhappy with the move.

The China Computer Federation has issued a public statement condemning the Microsoft moves, saying the company breached the basic ethics of software developers with the unsolicited remote control of computers.

(Xinhua News Agency November 1, 2008)

Baidu.com Inc., China’s leading Internet search engine, has launched its own online shopping website and aimed to make it the largest of its kind in the country within three years.

The website youa.baidu.com recorded more than four million page views, while 1.99 million items of goods went on sale on it on Tuesday, when the consumer-to-consumer (C2C) website was launched, the company said on Thursday.

Baidu said the website “would” replace Taobao, who held an 85 percent share of the C2C market, to become the country’s largest online retail platform within three years.

An officer of Alibaba, which set up Taobao in 2003, said they welcomed competition when asked for comments on the move of Baidu. However, Taobao blocked the search engine last month.

Taobao pursued free services since it was established in 2003 and in 2005 it promised another three-years of free services. The strategy helped it beat eBay to become the nation’s largest online auction site.

Nasdaq-listed Baidu is often referred to as China’s version of Google because of the Chinese-language search engine’s soaring popularity and profits.

The company’s net profit for 2007 rose 108 percent to 629 million yuan (92.1 million U.S. dollars) while revenues rose 110 percent to 1.74 billion yuan. Enditem

(Xinhua News Agency October 30, 2008)

A senior official of a world leading IT company said recently that open source technology stands as a significant opportunity for China’s development.

Crawford Beveridge, vice president of Sun Microsystems Inc. (NASDAQ: JAVA), said that open source software, the source of which can be used, modified and published by public, and other open IT standards are cheaper, more stable and flexible and are new ways to ensure local and sustained growth.

Its characteristic of openness can prompt the creation of indigenous innovative companies, regardless of macroeconomic or other international challenge, Beveridge said.

He said that the network growth makes people realize the possibility and potentiality of a real business model built on the open principle. The vice president said Sun would look forward to supporting China in this aspect.

Statistics showed that open source technology has been extensively received in South America, with 73 percent of corporate users in Brazil and 42 percent of such users in Argentina.

European countries are also joining this trend with their governments and official agencies more likely preferring to use open standards and open source solutions.

The rising of open source technology has taken over big market shares from its competitors, such as Oracle, Microsoft and IBM, all of which run against open source accessibility. Some experts say that open source technology has virtually introduced a more democratic way to technological development.

(Xinhua News Agency October 30, 2008)

US software outsourcing company CSC, one of the world’s largest IT outsourcing firms, said yesterday it will launch a new delivery center in China as the global financial crisis may force more Western companies to outsource their business to the country.

Michael Laphen, chairman and chief executive officer of CSC, said the financial turbulence would force more companies to outsource their business in pursuit of lower operating costs, thus creating more opportunities for outsourcing companies.

“Outsourcing will increase in difficult times as the financial crisis pushes companies to become more cost effective,” said Laphen. “We expect further robust growth from China.”

CSC’s new delivery center, located in Tianjin, will open next spring.

It will serve both CSC’s domestic and multinational clients in China and will have 500 employees within the next three years.

But Laphen declined to say how big its investment is in the new China facility.

Although the financial crisis has had a major impact on most of the world’s economy, CSC remains optimistic about economic prospects in China.

It said the country’s manufacturing and financial companies, which are two major customers for CSC in China, will continue to grow at a rapid speed.

During the past decades, multinational have been transferring non-core business to countries like India and China to reduce costs.

But as labor costs continue to rise in China, outsourcing companies in the country have been striving to go up the supply chain and earn money with more value-added services.

Lin Zheying, deputy director of foreign investment administration department under the Ministry of Commerce, said at an industry forum on Monday that the economic turmoil provided a good opportunity for China to develop outsourcing in service sectors, as many US financial institutions may have to outsource their business.

According to the ministry, the value of foreign contracts of Chinese outsourcing companies reached $1.9 billion in the first eight months, up 17 percent from the same period last year.

CSC entered the Chinese market in 1991 and now has around 300 employees in the country.

It has offices in Beijing, Tianjin, Shanghai and Guangzhou.

Globally, CSC has approximately 90,000 employees and reported revenue of US$17.1 billion for the 12 months ended July 4, 2008.

(China Daily October 29, 2008)

Intel Capital, the chip giant’s venture capital arm, yesterday made its first foray into the nation’s clean technology sector, purchasing a US$20 million stake in local solar energy firm Trony Solar Holdings Co. Ltd..

“China’s renewable energy industry is experiencing rapid development,” said Cadol Cheung, managing director of Intel Capital Asia Pacific. “We believe these investments will be a catalyst to drive local clean tech innovation.”

Trony Solar, established in 1993, is one of China’s biggest manufacturers of thin-film solar energy equipment, with sales in more than 20 nations.

The Shenzhen-based company will use the investment to ramp up its production capacity as well as strengthen its R&D capabilities.

Intel Capital also signed an agreement to invest in NP Holdings Limited, a technology company focusing on massive electricity storage systems.

“These investments demonstrate Intel Capital’s ongoing commitment to investing around the globe and its strategic focus on cleantech,” said Arvind Sodhani, president of Intel Capital.

Over the past 10 years, Intel Capital has invested in more than 80 companies on the Chinese mainland and in Hong Kong. In this April, it established a US$500 million Intel Capital China Technology Fund II in April.

Venture capital investments in China’s clean technology sector soared in recent years. In 2007, venture capitalists spent US$550 million to fund local clean technology startups.

(China Daily October 29, 2008)

Sohu.com Inc said yesterday its third-quarter profits quadrupled from a year earlier as a result of more online advertising income and an increase in online game players.

Net income of Q3 in 2008 increased to US$40.3 million, or US$1.02 a share, from US$9.69 million, or 25 cents, a year earlier, according to a statement by the company.

Brand advertising income increased 66 percent from a year earlier to reach US$49.4 million. Sohu benefited from the growth of Internet users in China following the Beijing Olympics as more customers used the platform to market themselves, which was within the company’s expectations.

“We gained strong momentum from the successful execution of our strategy in the third quarter,” said Charles Zhang, chairman and CEO of Sohu.com.

Revenues from its online game sector surged 330 percent from the same period last year to US$54.6 million.

Total revenues for the third quarter to September 30, 2008, were US$120.7 million, up 134 percent year-on-year.

Belinda Wang, co-president and chief marketing officer of Sohu.com, noted that the advertising revenue growth in this quarter was “mainly driven by the shifting of advertising budgets from offline to online, and robust spending” for the Olympics.

(Shanghai Daily October 28, 2008)

A top Chinese copyright official on Monday suggested Microsoft to consider more about “the price affordability of Chinese customers” amid recent “misunderstandings” over its “black-out” measure to stamp out piracy in China.

National Copyright Administration Vice-Director Yan Xiaohong said: “the administration understands and supports the rights-safeguarding move taken by institutions including Microsoft.”

But he pointed out that they should “pay attention to the methods”.

“Whether the ‘black-out’ method should be adopted is open to question. Measures for safeguarding rights also need to be appropriate, We’ve paid great attention to the ‘black-out’ issue, so do many experts,” he said.

Yan made the statement on the sidelines of the 2008 International Copyright Forum in response to the software giant’s latest move to allay privacy.

Microsoft’s latest anti-piracy tool turns computer desktops black if the installed software fails a validation test.

The program launched just after midnight on Tuesday, turns the desktop black every hour and users must manually restart the desktop.

The move has been met with fury by Chinese computer users and renewed complaints over the price of genuine software.

Yan said the strategy of using a unified global price for Microsoft products was questionable.

“We believe Microsoft’s price policies should fit the Chinese situation. The company adopted unified prices in the past without considering the income gap between developed and developing countries, so we need to kindly remind them that Chinese customers’ affordability should be considered,” Yan said.

But some software specialists called on the nation to use more of domestic products when facing the American company’s latest anti-piracy move.

“The black screen teaches us a better lesson than all preaching,” said Ni Guangnan, a leading researcher at the Institute of Computing Technology of the Chinese Academy of Sciences and academician of Chinese Academy of Engineering.

“Now people understand why China needs its own software, especially basic programs. Aren’t worse things likely to happen in the future?” Ni asked.

(Xinhua News Agency October 28, 2008)

ZTE Corp. posted a net profit of 32 percent growth year-on-year in the first nine months, slightly better than expectations, thanks to income contributions from overseas and handsets, the biggest domestic-listed telecom equipment maker said yesterday.

The Shenzhen-listed ZTE shares, however, dropped 10 percent daily cap yesterday. The price was only a quarter of ZTE’s peak price this year because of investor concerns of a slowdown in the economy and recent government telecom policies.

Analysts, however, said ZTE’s share is undervalued and it will keep a high growth rate in the fourth quarter and next year with profit engines like mobile phones and the domestic 3G orders.

In the three quarters, ZTE’s net profit was 973 million yuan (US$143 million), a 32.19-percent growth on a year ago, higher than the 30-percent growth rate which is the industry expectation.

At the same period, ZTE’s revenue was 30.33 billion yuan, a year-on-year increase of 29.34 percent.

“ZTE has established diversified income channels and it has the ability to hedge against risk and keep high growth development,” Fang Lu, the Shenyin Wanguo Securities Research’s analyst, said in a note.

ZTE’s revenue from mobile phone businesses, whose clients include Vodafone and China Mobile, increased 26.06 percent annually in the period. Meanwhile, ZTE’s overseas revenue contributed more than 60 percent of its total income.

ZTE’s gross margin was 34 percent by the end of September, higher than overseas rivals like Nortel and Alcatel-Lucent, which will help the company stay competitive in the coming 3G era in China, analysts said.

ZTE’s shares lost 10 percent in Shenzhen to close at 16.65 yuan yesterday.

(Shanghai Daily October 28, 2008)

China’s State Nuclear Power Technology Corporation (SNPTC) and the country’s famed Tsinghua University have jointly set up a research center in suburban Beijing to speed up the development of domestic nuclear power technology, the state-owned company announced in an online poster on Monday.

With the aim of becoming the country’s top engineering institute, the center will be focused on the research and development of key technologies applied to advanced pressurized water reactor nuclear power station.

Several generations of reactors have been developed worldwide for nuclear power stations since the 1950s. The third generation nuclear power technology, also known as the advanced reactor, is the latest design. China now has 11 nuclear power reactors in operation. Among them, three use domestic technologies, two are equipped with Russian technology and four with French technologies, and two are Canadian designed. All the 11 reactors employ second-generation nuclear power technologies.

Earlier in September, SNPTC announced the country’s plan to begin construction of the world’s first nuclear plant using the AP1000 technologies, a type of third generation nuclear power reactor introduced by America’s Westinghouse company, at Sanmen Nuclear Power Project in Zhejiang Province in March 2009.

The establishment of the State Nuclear Technology Research and Development Center came in accordance with a national energy strategy to promote nuclear power construction.

“With international pressure to cut greenhouse gas emission, as well as domestic energy restructure underway, it’s of great importance to obtain the capacity to build nuclear power stations equipped with self-developed advanced reactors,” the country’s top energy official Sun Qin said while congratulating on the center’s establishment.

At present, more than 70 percent of China’s electricity supply comes from thermal power stations. Coal burning has already become a major source of carbon dioxide emission.

The country planned to have 40-million-kilowatt installed capacity of nuclear power by 2020, accounting for 4 percent of the total power capacity. However, the current installed capacity of nuclear power is only about eight million kilowatts

(Xinhua News Agency October 28, 2008)

Baidu Inc, the Nasdaq-listed Chinese Internet search leader, said yesterday its net income for the third quarter surged 91.4 percent to 347.9 million yuan (US$54.2 million) from a year earlier.

Revenues in the year’s third quarter hiked to 919.1 million yuan, representing an 85-percent increase from the corresponding period last year.

Quarterly online marketing revenues were 918.2 million yuan, representing an 85-percent increase from the third quarter of last year, which was mainly driven by increases in the number of active online marketing customers and revenue per customer.

Baidu had more than 194,000 active online marketing customers in the third quarter of this year, representing a sequential increase of 7.2 percent and an increase of 35.7 percent from a year earlier.

Jennifer Li, Baidu’s chief financial officer, said the impact of the 2008 Beijing Olympics on Baidu’s business was in line with projections.

Baidu accounted for 73.2 percent of the search request market share on the Chinese mainland in the third quarter of 2008, down 1 percentage point from the previous quarter, according to the consulting firm iResearch Inc. Google was in second place with a 20.8-percent market share.

“Companies throughout China are increasingly recognizing the value of Baidu’s paid search as an effective marketing tool and we remain confident in our long-term growth potential,” said Robin Li, Baidu’s chairman and chief executive officer.

Baidu was also testing the market to move more aggressively into C2C, Li said.

(ShanghaI Daily October 24, 2008)