China plans to boost its software exports by 25% each year in a bid to reach $10bn of exports by 2010.
That's a pretty aggressive growth rate but China needs to step on the accelerator if it is to close its current yawning gap with India, whose software exports rose 23% to $23.4bn in the year to March 2006.
According to figures from the Ministry of Commerce, China exported $3.6bn worth of software and related services in 2005, a rise of 28% year on year.
China wants to foster "globally competitive software firms with their own brands and intellectual property rights", according to this Xinhua story.
Software firms will thus receive preferential treatment in areas like taxation, borrowing and foreign exchange controls, among other areas.
This heavy promotion of a home-grown domestic software industry makes a lot of sense. China realises that its long-term economic growth depend on knowledge-based industries like software rather than cheap mass-manufactured goods.
In addition, China's current manufacturing-led export success is causing tremendous frictions with western trading nations, particularly in industries that have been hard hit by Chinese counterfeiting of western goods.
Promoting a Chinese software industry based on home-grown IPRs is thus a smart tactical move, as it should helps deflect some of the continuing criticism levelled at China. And it has the support of some of the biggest names in the western-dominated software industry, not least Microsoft -- see yesterday's EngagingChina story.
While still relatively small, China's software industry is growing in sophistication and increasingly focused on export markets. For example,Rising, a Chinese maker of anti-virus software, is now signing up distributors in the west and its products have just obtained certification from Germany's TÜV testing agency .
While China's software industry
is growing fast, it has a long way to go before it can catch India. The
Asian rival has long dominated the software offshoring industry and
Indian IT outsourcing firms see China more as a new market opportunity
than a threat. Indeed, many are increasing their presence in China in
anticipation of growing demand for their services from foreign and
Chinese businesses based in the PRC.
