China spends $160M buying licensed software for government offices

The country expects to spend even more to buy licensed software for local government offices

China recently spent about US$160 million buying licensed software for use in its central and provincial government offices, as part of ongoing efforts to weed out piracy in the nation's government departments.

The country has been plagued by software piracy, and since 2001 has been encouraging government offices to use licensed software. At the end of 2010, however, authorities said they would begin inspecting government offices, starting from the highest level down to local municipal and county levels, to ensure they were using legal software.

At the end of last month, authorities completed the inspections of China's provincial offices, following previous inspections of central government offices, said officials at a Tuesday news conference. This culminated in authorities buying 158,823 copies of operating system software, and 506,693 copies of office, anti-virus and other software.

Now authorities are targeting municipalities and county governments, with the inspections expected to be completed before the end of 2013. Officials, however, suggested the cost of buying licensed software for these local offices could be significantly more. China has 2,800 counties, and more than 500 cities, compared with the nation's 31 provincial-level divisions.

The inspections are a big win for Microsoft, which has been lobbying China's government to clamp down on software piracy. The country's illegal software market was valued at close to $9 billion in 2011, while the legal market reached less than $3 billion, according to a study on piracy by the Business Software Alliance (BSA), an association of software vendors. In China, software products are often copied and later sold at a steeply discounted price.

Some BSA member companies have seen an incremental increase in software sales as a result of the government software legalization campaign, said Roger Somerville, a senior director with the group, in an email.

Other member companies have not seen any progress, though, so the BSA is hoping authorities' efforts to rein in piracy will eventually benefit all software providers, Somerville said.

Chinese officials on Tuesday said the government has been facing international pressure to end the piracy. To help government offices buy licensed software, China has set up a designated website where they can procure the products, which are discounted from their original price by 30 to 50 percent.

Currently, the country's central and provincial government imports as much software as it sources locally, said Yan Xiaohong, deputy director of China's National Copyright Administration. Government departments are buying more foreign software to meet their operating system needs. But for office suite software, about two-thirds of the purchases are of domestically produced products, Yan said.

"Foreign software entered China earlier, and it has its technological advantages, and users are in the habit of using the software," he said. "But in these past years, domestic software development has also been fast. We can say that in terms of performance and service, the software has been able to satisfy government groups' demands."

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Michael Kan

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