Microsoft's buying deals arouse concern
By Wen Dao (China Daily)
Updated: 2004-11-26 08:56

While the US software giant Microsoft has achieved almost sweeping victories in government procurement projects in several Chinese provinces and municipalities, the process and system of software government procurement is raising increasing concerns in the industry.

According to the website of the Government Procurement Office of Beijing Municipality, Microsoft's sales agency Beijing Centre Electronic Technology Co Ltd became the only provider of operating systems and office software suites to the Beijing municipal government. The transaction volume was 29.25 million yuan (US$3.52 million).

Among all software put forward for bids, Microsoft Windows operating systems were the only winner in that category and for office software, Microsoft Office and three other Chinese software applications are on the list.

Beijing Municipality is expected to sign a government software procurement agreement with bidders today.

According to earlier reports, Centre Technology promised to provide unlimited licences to the municipality for three years.

The victory is just one of several successes that Microsoft has achieved in recent months.

Tianjin Municipality also announced similar results on November 12.

Among the three winners in operating systems, two were Microsoft's sales agencies. In office software projects, three out of four winners were Microsoft Office software.

Since China forbids the use of pirated software in government departments and enterprises, and contracts for government agencies can set an example in other sectors, government projects are the hottest areas of competition for operating systems, office applications, and information security.

The moves of Beijing Municipality, in its role as the capital, usually have a huge influence on governments in other regions, so Microsoft's victory in Beijing is believed to be a significant deal.

However, government officials and experts have raised many objections to bidding processes and systems.

"Related government procurement departments in some provinces and municipalities, regardless of national interests and information security, bought a lot of foreign software and did not procure or procured only a little domestic software." said Li Wuqiang in a personal capacity in a written statement late Wednesday.

"The moves are against the Government Procurement Law and dealt a fatal blow to the development of the domestic software industry."

Li is deputy director-general of the department of high-tech industry of the Ministry of Sciences and Technology.

China's Government Procurement Law requires domestic products and services to be preferred in government projects. Foreign products and services can only be used, if there are no alternatives from domestic vendors.

However, there is not a clear distinction between foreign and domestic software vendor, as the software government procurement regulation is still in the pipeline.

The official website of Beijing municipal government responded to criticism yesterday.

An article on the website said the municipal government found out in an inspection in the first half of this year that some government departments could not provide proper licences for software they were using, and most of them were Microsoft products.

So the government decided to solve the issue once for all and would buy only a certain amount of Microsoft software.

It also required that domestic software should be preferred in new projects in the future.

Ni Guangnan, an academician of the Chinese Academy of Engineering, said it is not correct to use foreign software, just because users are not used to domestic software.

Ding Wenwu, deputy director-general of the electronic product department of the Ministry of Information Industry, said his ministry would investigate the issues and report on them to the State Council or the Government Procurement Leading Group.

Microsoft was not immediately available to comment.

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