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US software giant Microsoft has made another multi-million dollar commitment to the development of the Chinese software industry as it continues to enjoy a honeymoon period here.

Efforts will be made to help the industry grow further and also give farmers more access to the digital world.

Steve Ballmer, CEO of the world's biggest software firm, said yesterday in Beijing that the firm has signed a memorandum of understanding with the Ministry of Information Industry (MII).

In it, Microsoft promises to increase its help to China's  information industry and narrow the digital divide between urban and rural areas.

MII and the software behemoth will also build three centres and upgrade two existing laboratories to work with Chinese partners on the development of new technologies and applications.

Steve Ballmer, CEO of Microsoft, the world's biggest software firm, said yesterday in Beijing that the firm has signed a memorandum of understanding with the Ministry of Information Industry to increase its help to China's  information industry and narrow the digital divide between urban and rural areas. [newsphoto]

It will also work with MII to build five pilot information centres for farmers to help them gain access to agricultural and market information, as well as long-distance learning.

Microsoft also said it would help train 1,000 instructors and 20,000 software engineers and offer online courses to another 50,000 engineers.

The software giant is expected to invest 250 million yuan (US$31 million) in the projects.

Ballmer also said his company will provide training and consulting for three designated Chinese firms in software application development. It will provide university courses, curriculum development, and other training.

These three Chinese firms are expected to get sales of several million US dollars with Microsoft's help.

"Only when we have the greatest partnership with Chinese companies and customers, can we really succeed," said Ballmer.

It is the second major investment by Microsoft in China in about one month.
On April 18, it signed a memorandum of understanding with the National Development and Reform Commission to start their second phase of co-operation.

In 2002, Ballmer signed an agreement with the Chinese commission to begin co-operation. In that deal, Microsoft said it would give contracts and investments worth US$750 million over three years to help China nurture its information technology industry.

All this investment and commitment has not gone unnoticed by China. President Hu Jintao said during his recent visit to Microsoft's headquarters that Bill Gates was a friend to China and the Chinese people.

In return for the help from the software giant, three top Chinese computer makers  Lenovo Group, Founder Technology and Tsinghua Tongfang  have promised to buy US$1.7 billion worth of software from Microsoft.

Furthermore, the Chinese Government required that all computers sold from this year have genuine operating systems installed, and not pirated ones.

Considering the shipment of almost 20 million computers last year, the market can bring enormous potential to any software firm.

In the agreement signed last month, the software titan promised to outsource hardware production including keyboards, mice and Xbox game consoles to equipment manufacturers in China. The amount was supposed to be US$700 million a year with a total of US$3.5 billion over five years.

Microsoft will also outsource some software development and testing contracts worth US$100 million to Chinese firms and train 10,000 software engineers.

Tang Min, president of China Software and Services, which has been benefiting from Microsoft's help, said co-operation with the US firm has greatly lifted the smaller firm's software development capability, especially in outsourcing.

Huang Yong, president of the Chinese research house CCID Consulting, believed it would be good for Chinese firms to learn international practices in software development and outsourcing.

(For more biz stories, please visit Industry Updates)