Microsoft in global tie-up with Chinese distributor

Microsoft has teamed up with China's largest distributor of IT products, Digital China Holdings, in a global deal that will bring the two companies closer together in several key areas.

Under the terms of a memorandum of understanding signed by the two companies in Beijing, Microsoft would provide Digital China with training and work with the distributor to develop software products and services based on the .Net framework for enterprise customers in a range of industries, including telecommunications, finance and government, Digital China said. Financial terms of the deal were not disclosed.

The deal struck by the two companies received the blessing of Chinese government officials, including Zhang Qi, director general of the Ministry of Information Industry's (MII's) Department of Electronics and Information Product Administration.

Digital China said that Zhang praised the agreement as lending a boost to the development of China's domestic software industry.

While Digital China described the agreement with the software company as a global partnership, it did not give details of how this deal would affect customers outside China. Digital China does not provide a geographical breakdown of its revenue, but the company noted in its most recent annual report that 10 per cent of its revenue is derived from business done outside mainland China.

Microsoft executives in Beijing could not be reached for comment.

Digital China, based in Beijing, is the former distribution arm of Lenovo Group, China's largest PC maker. The company was spun off as an independent unit in 2001. Since then, Digital China has embarked on a path to transform itself from a distributor into an IT services provider and systems integrator.

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Sumner Lemon

IDG News Service
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