Research outfit Gartner has noted an ominous development for Microsoft and other non-indigenous firms operating in China. On 28th December 2001 the Beijing municipal government awarded contracts to six local software vendors, and rejected the seventh bidder - Microsoft. The contract covers office automation, antivirus and operating software, one of the winners being Linux OS vendor Red Flag.
The move is particularly important because it may signify a trend. Beijing is 'going legit' by buying software for machines that were bought without copyright software on board, and fixing this is something Chinese government agencies and businesses are going to have to do on a widespread basis in the wake of China's entry to the World Trade Organisation. Western IT companies lobbied hard in favour of China's entry, taking the view that it would give them access to a huge market. Microsoft itself already has a large presence in this huge market, but the difficulty is that the bulk of its presence is accounted for by pirated software.
China agreed to clean up its act on intellectual property as part of its WTO membership, but the Beijing move suggests that it will do so by opting for local companies. If this is the case western vendors will miss out on the market, and Windows use in China will be steadily eroded by Linux. Gartner suggests that Microsoft's failure to win a contract stems in part from poor negotiating, its troubled relationship with the Chinese government, and the government's support for indigenous vendors. It suggests Chinese firms "should take this opportunity to seek additional discounts and other incentives from Microsoft, for whom China is an important market." Indeed. ®