Beware Of Dragons Piracy Bite

Updated: May 30 2002, 05:30am hrs
Whats the dragon offering for information technology (IT) and communication companies planning to make investments in China Confederation of Indian Industry, which has studied the subject in depth, has a word of caution: expect high piracy rate, absence of customer service ethic and poor availability of marketing talent.

China suffers from a high piracy rate of 91 per cent which is an important psychological barrier, CII said, quoting its study on Challenges and Opportunities in Chinas IT Market 2002.

In comparison, India has been able to successfully tackle the menace of piracy, it said.

Poor marketing abilities of Chinese firms could be another hurdle for IT companies venturing into the land of dragon. China is many years away from developing the marketing skills required to sell packaged software abroad, CII has concluded. Here again, CII has given full marks to Indian companies for their high level of customer-service ethic: the Chinese lag far behind Indian firms in their customer-service ethic and understanding of foreign clients.

The study also highlights other comparative advantages which India enjoys over its neighbour, a prominent one being the wage structure and educational level of professionals at the senior level. India also has a definite advantage over China so far as English language and ability to programme is concerned, it added.

But CII believes that Indian and Chinese companies can join hands to form alliances. CII has suggested a broad strategy of cooperation, competition and mutual investment for Indian companies interested in investing in China.

Have long-term approach and have a clear strategy to protect domain knowledge in China, is CIIs advice.

It has also cited several positive factors for making investments in China. These include entitlement to a rebate on value added tax (VAT) on inputs at effective VAT rate of 3 per cent, a two-year holiday on enterprise income tax followed by a three-year of tax at half the normal rate, duty free import for computer equipment software, easy access to export credit, low power cost at $2.5/KWH and flexible labour laws.

Indias vantage position in the information technology & communication sector provides opportunities for domestic companies to join hands with Chinese firms including China Telecom, China Mobile, China Railway Telecom, China Unicom, Jitong, CNC, Kanka, Hauwei, Kingdee, UFSoft and Kingsoft, the study said.

The study has identified potential business locations in China for the Indian companies which include Pudong for chip design, Shenzen for corporate solution, Beijing for banking, finance, telecom and security, Shanghai for management software, Dalian for hitech industries.

China provides ample of opportunities for Indian companies as it is implementing e-governance in a big way. It has announced e-governance initiatives like Sowant (SMEs), social insurance, the golden bridge project, the golden taxation project and golden health project.