Microsoft Seeks Government Alliance

The international software giant microsoft has a good relationship with the Chinese governments of different levels. Their methods of dealing with government are worth learning for every foreign company.

The popularity of Microsoft’s Windows 7 and Office 2010 was recognized soon after their being launched. It was once reported that seven copies of Windows 7 were sold in one second and one copy of Office 2010 was sold in seven minutes. However, this performance pales in front of Microsoft’s great efforts in the Chinese market.

In order to win the orders from its biggest customer in China the Chinese governments, Microsoft has spent a lot of time and energy. From 2002, Microsoft began to make use of the government force to improve the environment for intellectual property in China. It adopted many PR measures to persuade different government departments to buy authorized software. Different from eight years ago, Microsoft now extends its relationship with the central government of China to the local governments of different places.

Marriage with Local Governments

On October 26, Microsoft announced the strategic partnership with the government of Jinan, Shandong. This partnership is expected to bring 5-billion-yuan software outsourcing income for Jinan and foster 10 thousand software talents. Microsoft will also set up a branch in Jinan. Actually, when Microsoft began to cooperate with the National Development and Reform Commission (NDRC), it had built global partnership with Langchao Group, a leading IT company located in Jinan.

In return, the Jinan municipal government initiated the program of “installing authorized software into every computer in government departments”. It also worked with Microsoft in upgrading the “Shandong Microsoft Tehcnology Center” into the “Shandong Branch of the NDRC-Microsoft Software Innovation Center”. In addition, measures are carried out to encourage local companies to conduct technological development based on Microsoft’s cloud computing platform.

One month before, Microsoft built similar partnership with the municipal government of Shenzhen, Guangdong. According to the memorandum, Microsoft will provide the Shenzhen government and local companies with convenient and accessible cloud computing services. The Shenzhen government will promote the cooperation between Microsoft and Comtech (a local IT company) to build the manufacturing base of built-in technology and software laboratory.

Microsoft has also good relationship with Shenzhen. Xu Qin, present mayor of Shenzhen, once signed a memorandum of cooperation valuing 6.2 billion yuan (USD 931.6 million) with Microsoft when he was working for the NDRC. This is by far the largest cooperative IT project in China. Specializing in producing hardware products represented by Xbox360 console, this project can bring about imports business of 4 billion US dollars each year.

Xu Qin knew the role and status of Microsoft in the software industry chain. He hopes that he could improve the role of Shenzhen in the global software market with the aid of Microsoft. Microsoft is expected to invest in Shenzhen with sincerity and seriousness. Therefore, Microsoft improved the cooperation with Shenzhen when the Shenzhen Special Administrative Region was greeted by its 30th birthday. According to the survey, Microsoft’s sale of hardware products can reach 7 billion US dollars per year. Many of its hardware products, including Xbox and Zune, are produced in South China. It is known the Kinect the latest human-computer interactive game console will also be produced in Shenzhen.

Presently, Microsoft’s strategic cooperation with the NDRC has been in the second phase. But Microsoft’s cooperation with Chinese local governments is not limited to copying the pattern of working with the NDRC. From August 2010, Microsoft launched its plan of “urban expansion”, aiming at building solid relationship with local governments. It is known that Dongguan, Xi’an, Qingdao and Nanjing are also the targets of Microsoft.

Simon L. K. Leung, CEO of Microsoft Greater China said: “The Chinese cities with great potential are undergoing fast development in communication network infrastructure, governments’ portal websites, corporate information exchange and digital media. It is good for Microsoft to exert its skills in software, service and solutions.”

Via “Cloud Computing”

It is known that Microsoft has three goals of cooperating with local governments: a), to spread the usage of authorized software; b), to encourage local companies to buy authorized software; c), to promote the application of Microsoft’s cloud computing platform.

Zeng Liang from the PR Department of Microsoft Greater China said: “The cooperation between Microsoft and Chinese government takes win-win situation as the primary target.” This means that the partnership between Microsoft and Chinese government previously featuring the “teacher-and-student” relationship is changing now.

Chen Yongzheng, former president of Microsoft Greater China, once said: “The NDRC can do better in IT with our guidance.” Previously, Microsoft’s investments in China were usually approved by the NDRC.

Though Simon L.K. Leung shares the same goal of developing in China with Chen Yongzheng, changes have happened to Microsoft in dealing with the relationship with Chinese governments under Leung’s leadership. It seeks scheduled and systematic cooperation with local governments of different cities and puts great efforts in promoting the “cloud computing” business.

When talking with the local governments, Microsoft always introduced the “cloud computing” program to them. In truth, apart from spreading Windows OS and Office, Microsoft commits itself to spreading the use of “cloud computing” platform among the Chinese companies. It evens provides support for the smart city system of Wuxi Cloud Computing Center which is sponsored by IBM.

“Cloud computing” is an important target and carrier of Microsoft in dealing with local governments. Like IBM, Microsoft considers governments as the core for developing “cloud computing” business. Since there are problems of safety and credit about “cloud computing” platform in China, i.e. the builders of the platform own it, the platform built and owned by the government can reassure the companies.

Zeng Liang denied the negative influence of IBM’s smart city program over Microsoft’s deployment in China, though he admitted that the two IT giants chose the same targets during their development.

Zhang Yaqin, senior vice president of Microsoft stressed the importance of “cloud computing” for Microsoft. “It is of great significance, especially in China. We get access to more resources if we make a good job at this field. But the process will cost a lot of time.”