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China's IP Record Worries Microsoft

by Mary Swire, for, Hong Kong

25 May 2010

Microsoft CEO Steve Ballmer sees little worth in investing in the Chinese software market because of the ongoing problem of piracy in that country.

In an interview with Bloomberg, Ballmer indicated that the world's largest software company would concentrate its efforts in countries such as India and Indonesia as it seeks to enlarge its share of the Asian market because the problem of piracy in these countries, while worrying, is not as great as in China.

“India is not perfect but the intellectual property protection in India is far, far better than it would be in China,” he told Bloomberg. “China is a less interesting market to us than India, than Indonesia.”

It has been suggested that as much as 90% of the copies of Microsoft Office in use in China are counterfeit, and therefore Ballmer believes that "there is no market to speak of" in the world's fastest-growing emerging economy.

Ballmer's comments echo those of the US government, Congress, and business groups which have repeatedly castigated China for its lack of effective enforcement against intellectual property crime. Last week, China was one of five countries placed on the Congressional International Anti-Piracy Caucus 2010 International Piracy Watch List, which highlights countries where copyright piracy has reached "alarming levels."

Other aspects of China's IP regime also concern the US authorities; earlier this month, US Commerce Secretary Gary Locke spoke out against Chinese intellectual property laws which effectively shut out foreign firms from taking part in China's government procurement process. 

The Chinese government rejects international criticism of its IP laws, and Foreign Ministry spokesman Ma Zhaoxu was quoted as saying by state news agency Xinhua last weekend that the effect of policies, measures and actions taken by China to strengthen its IP regime "are there for all to see."

"The involved US Congress members should respect the fact and stop making groundless accusation against China," Ma remarked.

In the past, Microsoft has used its 'Windows Genuine Advantage Program' in an attempt to reduce sales of pirated versions of its Windows software in China. Introduced in the country in 2008, office workers using invalid copies of software saw their computer screens not only subject to permanent pop-ups, but also hourly blackouts forcing them to reboot their computer.

The strategy does not appear to have had much effect however. Indeed, it has been argued that Microsoft would do better to reduce piracy by cutting the price of its products on sale in China.

TAGS: business | India | commerce | law | intellectual property | copyright | China | enforcement | e-commerce | Indonesia

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