Microsoft’s Troubles in China – Case Study 1.
)How important is China to Microsoft’s long-term future?.
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Microsoft’s long-term future includes significant business in international markets. Seeing that China represents the third largest PC market in the world as of 2001, Microsoft believes this to be a potentially large market with an approximate population of 1.3 billion. Also attractive is an economy growing which doubles that of the world’s average. If Microsoft aims to be the biggest in software developer and retailer, it must continue to gain business of growing markets such as China.
2.)What are the legal impediments to Microsoft growing its sales in China? What are the political impediments? .
Microsoft enjoyed $100 million in Chinese sales in 2000 but that number could have been significantly more if it weren’t for the lack of protection when it comes to the protection of intellectual property. In China’s case, software piracy has the greatest effect on Microsoft’s sales. Somewhere between 90 and 95 percent of software in China is pirated. The legal impediments are due to Chinese judical authorities not enforcing their own laws. Even when pressured by Microsoft to prosecute offenders, Chinese authorities only gave offenders a slap on the wrist and award to Microsoft totaling meager amounts of comensation as copared to their loss. Political impediments include China’s government not allotting enough money in their budget for software purchases. This causes the bureaucracy to find other alternatives which include cheaper software, most often, pirated. Another political impediment is the concern the Chinese government has with the security of Microsoft software. Since an open source code isn’t provided, China is worried about national security. They are afraid the United States shut networks down. This has caused China to pursue another option to Microsoft, that of Linux software which allows the user to formulate its own source code.