9 February 2004 The Chinese government has pledged equal treatment to foreign and domestic technology companies in procurement contests for new government contracts.

The promise was made despite a plan in 2003 to promote locally produced software by earmarking government spending for domestic products.

However, a report in the China Daily newspaper said that new regulations will be issued soon that would not discriminate between local and foreign companies in government contracts.

The newspaper quoted government officials as saying that the development of China’s software industry would be best achieved through “the further opening and more co-operation with foreign firms”.

For software vendors, China, with its huge population and rapidly expanding economy, is of immense strategic importance. Despite this, its software market is small, government spending remains low and piracy is rampant.

Despite this, statements from vice-minister for Information industry Gou Zhongwen have been ambiguous, seeming to imply that it is, in fact, Chinese companies with foreign investment that are the subject of these new rules. “Software firms invested by foreign companies will enjoy equal opportunities from government procurement,” he said.

China has traditionally been suspicious of foreign software companies. Microsoft is viewed with particular suspicion. The Chinese government has been keen to promote local alternatives based on open-source Linux software.

Nevertheless, foreign companies’ market share has actually grown in the country as a result of piracy. This has undermined demand for local rivals’ products. Microsoft’s operating system and Office suite have become the de facto standards in China even though few copies are actually paid for.

The policy announcement has been made alongside a similar statement by government officials to lift bans on foreign investment in television, as part of a large-scale reform aiming to revitalise China’s sagging, state-dominated media industry.