Beijing city government favours local software suppliers

Beijing municipal government last month awarded contracts to six local software vendors in its largest desktop software purchase to date, passing over a bid from Microsoft Corp., according to the Beijing Press and Publishing Bureau.

The largest contract, worth 15 million renminbi (US$1.8 million), went to domestic office automation and antivirus software vendor Kingsoft Software Company Ltd., according to the bureau.

Linux developer Red Flag Software Company Ltd. won another of the contracts.

“The government, like most other software buyers, would consider the price, product and performance of the software, and I think local companies have the edge because we can provide better and more immediate service,” said Liu Bo, chief executive officer and president of Red Flag.

The Linux operating system has been increasingly popular in China, mostly due to strong government support of the open source environment, and will continue to see greater adoption due to this latest endorsement by the municipal government, according to Liu.

“Microsoft still has the monopoly over desktop PCs and Linux has a long way to go,” he said, adding that the future of software in China is with Linux, and that the low cost and openness of the Linux platform makes it a popular choice in China.

Although Microsoft has over 80 per cent market share in the desktop PC space on the Chinese mainland, the impact of its loss in the software tender process can be more profound in the long run, according to a Shanghai-based analyst with Gartner Inc.

“It has great impact on the later purchases of the other departments of the State,” said Louisa Liu, research analyst at Gartner. “In the short term, it won’t affect Microsoft much. However, if Microsoft can’t deal well with the Chinese government agencies, it will face some headaches in its expansion plans in the China market in the mid to long term.”

Kingsoft hailed the municipal government’s exemplary role in promoting intellectual property rights. The move will popularize and foster legal use of software, the company said in a statement.

The Beijing municipal government purchased operating system, office automation, and antivirus software to replace pirated software in the more than 60 departments and agencies it controls in the Chinese capital.

Upon the country’s entry into the World Trade Organization last year, the Chinese government committed to greater protection of intellectual property rights.

The Beijing Press and Publishing Bureau can be contacted at +86-10-8425-1187 or

Red Flag, in Beijing, can be contacted at +86-10-8265-6655 or

Kingsoft, also in Beijing, can be contacted at +86-10-6252-4868 or