By PETER HANNAM
c.1997 Bloomberg Business News
 EIJING -- Microsoft Corp., the world's biggest software
company, says the potential benefits from surging computer sales in
China outweigh the losses from rampant piracy.
While the Redmond, Washington-based company is losing money in
China, ``as long as the (personal computer) shipments are there,
the opportunities are there,'' Bryan Nelson, the company's regional
director for Greater China told a media briefing.
Personal computer sales grew about 60 percent in China in 1996
to about 1.8 million units. The government predicts sales of
between 2.4 million and 2.7 million PCs this year.
Those computers are increasingly being sold with Microsoft's
software already installed. The company estimates only about 20
percent of new PCs are loaded with legal Microsoft programs now;
that share could rise to 50 percent by the end of this year.
Nelson said China's software market would be worth as much as
$500 million a year if piracy weren't so widespread. Illegally
copied programs now account for about 95 percent of software sold
in China, he said.
Still, the market could top $1 billion by 2000, he said.
Microsoft's China sales are a small fraction of that total, and
remain smaller than in Hong Kong or Taiwan. Microsoft still loses
money in China, but hopes to be profitable ``soon,'' Nelson said,
declining to give specifics.
``The feeling we're getting in China is very much that the
market is maturing very fast,'' Nelson said.
The company now has some 600 dealers set up nationwide and about
160 employees in China, Nelson said.
Nelson said Microsoft is seeking to introduce Chinese language
versions of its software programs within 90 days of the
English-language launch.
The company Tuesday launched its Chinese version of its Windows
NT Server 4.0 and Workstation 4.0., about three months after their
launch in Hong Kong.
Nelson said such networking products as Windows NT are proving
particularly popular as Chinese government agencies and companies
try to improve internal communications among distant sites.
For instance, Microsoft is targeting the State Taxation
Administration, which alone has some 30,000 offices nationwide.
China's biggest commercial banks, some of which have more than
10,000 branches, are also promising markets for networking
products, Nelson said.
The company is also looking to boost use of general software
products, such as its new Office 97 programs. Office 97 is
scheduled to be launched in Hong Kong next week, and in China by
April, Nelson said.
Internet is also fueling sales. ``The Internet opportunity in
China is red hot, as it is everywhere else,'' said Nelson, adding
that the company is having difficulty keeping up with demand.
Nelson said the company has overcome problems with its Chinese
language word processing programs on Windows 95 operating software.
Last October, Microsoft had to replace existing copies of the
software after users found anti-Communist slogans appeared on their
computer screens.
``It was a challenging time,'' Nelson said.
The company at least developed ``a close relationship'' with the
Ministry of Electronics Industry and other government agencies, as
it scrambled to retrieve the offending software and provide an
updated version.
(The Bloomberg web site is at http://www.bloomberg.com )
NYT-01-07-97 1224EST<
 
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