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Capital may review deals on Microsoft
By Yu Chen (China Daily)
Updated: 2004-11-30 09:49

The Beijing municipal government may reconsider its software procurement since it became target of criticism for giving Microsoft the lion's share of a large software purchase order, analysts say.

Sources close to Beijing Municipality said the software procurement plan was reviewed yesterday as it raised increasing concerns from the industry.

No immediate comment has come from the municipal government.

Microsoft beat domestic software developers on November 17 by winning a 29.95 million yuan (US$3.6 million) contract which would license the Beijing municipal government to use all of its software products for three years.

Microsoft's deal immediately aroused criticism within the industry as the deal belongs to government procurement, which is expected to favour domestic software developers.

Following the win, a notice was announced on Sunday on the website of the Government Procurement Office of Beijing Municipality, stating the municipality has cancelled the purchase order for computer operating systems and office software suites in the name of the purchaser Beijing Information Work Office.

Although there is no further information about the cancellation, some analysts speculate chances to win the bid will become available again for domestic software companies, which were formerly given to Microsoft.

Meanwhile, sources close to the Beijing Municipal Government said the municipality is negotiating with Microsoft on the deal.

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

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

In a statement available yesterday, Microsoft said the company will closely work with the local government, industry and partners to boost the development of China's software industry.

In fact, many domestic competitors and some government officials said Beijing has failed to respect China's law on government procurement, which stipulates that when a local product is available it should receive preference over foreign products.

"Government procurement is one of the most powerful driving forces for us," Qiu Bojun, board chairman of Kingsoft Corp, said in an article published on www.sina.com yester-day.

China implemented its govern-ment procurement law on January 1, 2003, which requires domestic products and services to be preferred in government projects.

Since China forbids the use of pirated software in government departments and enterprises, government projects are the hottest areas of competition for operating systems, office applications, and information security.

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