Software Sector Gears up for Fast Development

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China will promote the development of its software industry over the coming years, especially encouraging brand-building and innovations with self-owned intellectual property rights (IPRs), according to senior officials.

"Despite an average growth rate of 30 per cent in recent years, the country's software industry still features lower and medium-end products and services in the global market," said Bo Xilai, minister of commerce, on a ministerial summit yesterday during the 2005 China International Software and Information Services Fair.

The lack of core competitiveness - self-developed products and top software engineers with rich management experience - has become an obstacle to the sector's sustainable growth in the long term,[link widoczny dla zalogowanych], he said.

China's software market, valued at only 44 billion yuan (US$5.3 billion) in 1999, has been increasing by an average 38 per cent year-on-year. The market value hit 220 billion yuan (US$26.5 billion) last year, which, however, accounted for only 3 per cent of the global market. The country's export volume last year, estimated at US$2.8 billion,[link widoczny dla zalogowanych], was only one-tenth of India's, according to Bo.

China's software outsourcing depends heavily on the Japanese and South Korean markets, demand for which is dominated by lower-end services such as testing and coding, he said.

To improve China's software industry from volume-oriented to more quality-oriented with expanded capacity, the government will help domestic companies build their own brands in both domestic and overseas markets. Specifically, software multinationals will be encouraged to set up R&D centres in China, and domestic companies will be encouraged to acquire internationally-adopted professional certifications to enhance their processing management skills, said Bo.

Meanwhile, China will conduct more exchanges and co-operation with software companies from the United States, Japan, Europe, India, Ireland and South Korea, countries that have either developed a mature mechanism for or have sought an appropriate approach to the development of the software industry, he said.

Vice-Minister of the Information Industry Lou Qinjian said at the summit that the Chinese Government will roll out policies to perfect the relevant systems regarding venture capital and fund-raising, as well as investment in equipment, to accelerate the industrialization of core technologies with self-owned IPRs.

In addition, personnel training, key to the skill-intensive software industry, will be strengthened.

Despite the fact that about 700,000 people are employed in the sector, the software industry is facing staff shortages at the top level who have work experience in multinationals and the management skills needed for complex software projects. Engineers good at the development of certain applications in traditional sectors are also in urgent need, explained Luo.

Foreign language deficiency, considered another obstacle for the domestic software makers to expand overseas,[link widoczny dla zalogowanych], can be improved through bilingual training, and relevant departments in colleges and universities are being encouraged to promote such a training model, he said.

To date,[link widoczny dla zalogowanych], 35 colleges or universities in China have set up software institutes.

Also high on the agenda is the IPR issue.

"IPR protection is crucial to the sector's long-term development, and is the most urgent mission that the industry should fulfill over the coming few years," said Bo.

The government is responsible for enhancing overall awareness about IPRs. While cracking down on fake software, it will spend more on personnel and energy to promote using authentic versions among the public. Firms, meanwhile, are supposed to learn more about how to protect, utilize and manage their IPRs in daily operation, he said.

In another development, Dalian Ascendas IT Park, a Sino-Singapore joint venture with a total investment of US$200 million, was launched on Wednesday.

Aiming to set new benchmarks in China's burgeoning IT sector, Singapore-based Ascendas Pte Ltd, well-known in the Asian business space industry,[link widoczny dla zalogowanych], "will bring its 20 years of regional experience in science and tech park development to the fast-growing market in China," said Ascendas President and CEO Chong Siak Ching.

The new park is part of the Dalian Software Park where over 200 IT companies are located.