Chinese software firms have launched a new round of attacks in the heated government procurement market by donating free copies of software to provincial governments in western China, as a move to win more government users and improve their image.

Ge Ke, vice-president of the WPS unit of Chinese software company Kingsoft, said yesterday that his company had signed agreements with governments in the Tibet and Ningxia Hui autonomous regions, and Qinghai Province in western China.

In October, Kingsoft, the most famous Chinese office software provider, donated 8,000 copies of its WPS Office software worth almost 5 million yuan (US$604,000) to the Tibet Autonomous Region's government.

It also gave 8,400 copies of WPS Office to the Ningxia Hui Autonomous Region's government in December.

Talks with the Qinghai provincial government are currently underway.

"We just want to show our determination to assist government departments in pushing the use of authorized software," said Ge.

The Chinese Government requires government agencies to use authorized software in their work by 2005, so it has become a huge market for many software firms, including Microsoft and Kingsoft.

Beijing and Shanghai municipalities, and Guangdong, Sichuan, and Shanxi provinces have already held some government procurement tenders to buy software for government officials.

In November, Microsoft offered to provide Windows operating systems and Office software to all government officials in the Chinese capital in three years.

The contract was valued at 29.25 million yuan (US$3.52 million) and Microsoft was tipped to be the only provider of operating systems and office software.

However, an outcry from industry officials and the public made the Beijing municipal government revise the plan and gave some orders to domestic software firms, but Microsoft was still the biggest winner in the procurement.

An attractive price, strong marketing efforts and its investment in Beijing were a few reasons for Microsoft's success in the deal.

Considering the over 50,000 employees under the Beijing municipal government and the three-year licences of both Windows and Office, the deal was believed to be very cheap.

An industry insider said the US giant also won another deal in Southwest China's Sichuan Province to provide software and services almost free of charge.

Domestic software firms have learned from this experience and started to provide major discounts or donate free software to some provincial governments.

Kingsoft's Ge said he believed the donations to the three provincial governments will help them achieve the Chinese Government's goal of using authorized software by the end of 2005.

It will also reduce their financial burdens, because they are underdeveloped regions with insufficient financial budgets.

He added the move will help establish the company's reputation among government users and the public.

Zhao Xiaoliang, president of Beijing Red Flag Software Co Ltd, said his company also donated more than 8,000 copies of its Linux operating systems to the Tibet and Ningxia Hui autonomous regions.

He added the value of the donation will be roughly the same as Kingsoft's.

Besides helping governments use authorized software, one bigger and longer-term benefit for domestic companies is to get government officials into the habit of using software from Chinese firms.

Kingsoft's WPS Office has a higher popularity among users in western regions with its Chinese-language features, as it has been engaged in the industry for 17 years.

The donation of operating system and office software will also give an opportunity for software firms to promote their other products.

Kingsoft offered its anti-virus software Duba with its WPS Office to the three provincial governments to penetrate into western regions, where awareness of its anti-virus products is not high.

Ge said his company will also train local government officials on how to use the software and help them build e-government platforms.

Huang Yong, an information industry expert with domestic research house CCID Consulting, agreed that the free donation of software will help local software firms in the fight against their competitor Microsoft in some regions.

Microsoft China declined to comment on the domestic firms' moves.

However, Huang warned that although companies like Kingsoft will win users in the regions, how to retain them after three years remains a question.

Kingsoft's Ge also acknowledged the problem, but he was optimistic that the three-year co-operation and the quality of Kingsoft's products will help the company strengthen its position.

Huang pointed out that free donations and maintenance services will present the firms with another difficulty.

The project will cost Kingsoft about 10 million yuan (US$1.2 million) and if the three-year maintenance and training services are included, it will be much higher than this.

Ge agreed the costs will be heavy, but his company will deal with this as winning a bigger market share is more important for the company currently.

(China Daily February 2, 2005)