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  Microsoft Corporation is an American Public

multinational company that mainly develops, manufactures and licenses a
wide range of computing related products. Expansion of Microsoft in
various countries including eastern countries like China and India is part
of their Globalization process. This essay will look at strategies of
Microsoft to expand in Chinese market and have an overlook on some of
the problems faced by company.

In hope to dominate in to one of the world¶s largest market Microsoft

formed a joint venture with a Chinese firm to launch MSN China and also
acquired assets of a local mobile software provider to offer MSN mobile
products in country. According to Microsoft it targeted the professional
mainly through those services as most of Chinese professional used MSN
to remain in touch with their business contacts. As according to Robert
w. Mcchesney µMost of the big companies want to have one brand with
one voice-that is their motto¶ (Robert W. Mcchensy, p86). Microsoft
tries to follow same mantra in its process of Globalization. It provides
consumers with whole lots of products of Microsoft interrelated to each
other that customer don¶t want to use or won¶t be able to use any other
option of products. If one big organization is using a particular brand
other companies may think that there are compelling advantages to using
it if everyone else. This is the kind of strategy Microsoft is using, it is
targeting main professional companies as it knows that rest of dependent
or related companies have to follow the same brand.

Microsoft entered the China in 1992 with a sales office and opened a
research lab in Beijing in1998. In 2002 Microsoft spent around $750
million through China's state planning department to train hardware and
software engineers (Aaron Ricadels, 2005). But this investment did not
help Microsoft to change the Chinese Govt.¶s decisions to use Linux
software instead of Microsoft Windows. µAs using Linux-based systems
have even greater economic advantages for the nation in Compared to the
Microsoft operating system¶(r


 . According to a rough
calculation by Xiaobai Shen the statistics for 2000 show 2.2 PCs in China
for every 100 people. Doubling this percentage would amount to 28
million PCs. If all of these used the Microsoft software package at the full
price of US$300, the total cost would be over US$8 billion, mainly going
to Microsoft in license fees. This rough calculation may yield exaggerated
figures and according to Chinese financials they could control that figure
by using local software like Linux. But Microsoft continued to invest in
Chinese market to expand its business and to strengthen government ties
which can help it in future expansions.
Making business in china is even more difficult for Microsoft due to
country¶s high level of software piracy. According to financial analysts
company is generating very little revenue in compare to the PC market of
company. µMedia and computer products the ³copyright´ industry are the
leading exports of United States, to the tune of $60 billion in 1997¶
(Robert W. Mcchensy, p102). Software piracy market is definitely
making an impact on this copyright industry. Microsoft might have over
90% of market share in China (r

 
 But due to piracy
Microsoft is getting only 10% of the revenue share from china. The cost
of Microsoft windows and licensed Microsoft products are very high in
China in compare to the local PC hardware. That¶s the reason most of the
PC¶s in China are not pre loaded with Microsoft Windows and people
choose to install pirated versions of software.

Microsoft had taken very tough steps to resolve the problem in China as
it is making very large investments in country. µIn May 1998, Microsoft
succeeded in suing two Chinese companies, Beijing Hai Si Da Science
and Technology Development Company, and Beijin Min An Investment
Consulting Company, for copyright violations¶ (r

 
 .
This victory was considered as a big achievement being the foreign
investor in the history of China. µThe two Chinese companies paid
Microsoft a total compensation of some 790,000 yuan (RMB) (about
US$95,000) and made public apologies in designated publications¶
(
, 1999). These victories of Microsoft were welcomed by
media and Governments in most of the developed countries but to defeat
the piracy of Microsoft products is a very big deal for Microsoft as cost
of licensed Microsoft products are too high to afford by general public.
According to Smith µBuying a licensed Microsoft product cost perhaps
as much as one month salary of office worker¶ (Smith,2000). Thus
considered China as a highiely price sensitive market as described by
Robert W. Macchensy as µcost driven Globalization¶ (Robert w. p 62)
Where consumer demands are more sensitive to prices than other
factors.

Despite of these kinds of local resistances to the business Microsoft

worked on different kind of strategies to make its secure place in
Chinese market. These strategies include joint venture with local
companies, making connection with Government bodies and
participation in social causes. It started securing Government purchase
orders. Microsoft also donated money and technology to different
social and educational organizations. Microsoft also increased its
Research and Development(R and D) budget in China while other
competitors cut down on R & D budgets in same period of time
(Financial Times, 2003). Microsoft also established joint ventures with
local Chinese companies as a part of their strategies. In this way it
shifted a part of responsibility to tackle software piracy on these
company¶s shoulders. In this way future of Microsoft proprietary
became the interest of Chinese Government as well. Microsoft with a
local computing company formed a joint venture named Censoft which
now develops business resource management software ( Xiobai Shen,
2005). In 2003 it also signed a deal with Chinese Government to allow
controlled access to source code and information.

For establishing its effect on Chinese market Microsoft also took other
strategic steps. A decision by Microsoft and contract manufacturing partner
Flextonics to shift Xbox console production from Hungary to China is a
example of that (Bernard Lewin,Electronic News). Low labor cost in China is
also a favourable factor for these kind of decisions. According to some
sources published in electronics news Wages rate of China is quite tempting
and it is hard to beat that. µMaxico and Hungary are also very low cost sites
and these countries are also very close to United States market but there are
other strategic issues to keep these production units in China¶(Hudson,
electronic news) .

There are some other moral and cultural issues that Microsoft faced in china.
Microsoft Chinese internet portal made a decision of filtering word like
µfreedom¶ and µdemocracy¶ from its search engine in 2005 and returning error
message instead. Obviously these decisions were made in response to
Chinese Government censors. According to one of the article eweek it is
sometimes good for the stability of nation to censor some of the information
but it has been seen that nations which are politically free tends to be more
stable. May be due to the joint venture there are some of the compromises in
taking decision but being a technically information providing company MSN
should speak louder about taking these kind of decisions. According to
editorial point of view of eweek being a American company MSN should
review their article about µUniversal Declaration of Human Rights¶ which
says ³freedom to hold opinions without interference and to seek, receive and
impart information and ideas through any media and regardless of frontiers´.
As according to (Adorno and Horkheimer 1947) µReal purpose of the mass
media was to provide ideological justification for the societies where these
industries were developed´(Robert W. Mcchensy). By taking this kind of
decision under the influence of power creates moral issues in countries like
China.

Despite of these kinds of moral, cultural, social and economical resistances

Microsoft is still optimistic about the growth of Microsoft in Chinese Market.
According to Bill Gates Chinese Market is 2nd largest PC market in this world
and with passing period Microsoft is securing its place in this market.
Although Microsoft is not making profit n China at the moment but with the
revenue of about 10 billions worldwide Microsoft can still take a risk of
establishing itself in this emerging PC market.

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