Bruce Einhorn At last, some good news for Microsoft in China -- and not a moment too soon, given the hard times the software giant has had in the world's largest country. Just last week, it confirmed that Jack Gao, the latest in a string of executives to head Microsoft China, had resigned after less than three years on the job. Gao's predecessor left Microsoft in a huff, writing a tell-all book that caused a stir among Chinese convinced that the company is the essence of American imperialism. That's a reputation that Gao worked hard to overcome, spearheading Microsoft's efforts to court local officials by opening big service and research-and-development centers in Shanghai and Beijing.
No doubt one of the most frustrating parts of the job for Gao was the level of software piracy. Indeed, when I spoke to him in Beijing two years ago, Gao said wearily that the Chinese love Microsoft's computer software -- they just don't love paying for it. The situation hasn't improved much since then. Microsoft announced on Mar. 26 that Jun Tang, who runs the company's Shanghai customer-service center, will take over as Gao's replacement.
BEATING CHAIRMAN MAO. So where's the good news, you ask? Consider the page-three story in last Friday's South China Morning Post, Hong Kong's premier English-language newspaper. Reporting on a poll by researchers at the City University of Hong Kong, in which over 1,600 teenagers in the former British colony and in mainland China talked about the person they idolized the most, the paper had some surprising news. No. 2 on the list -- ahead of Albert Einstein, their parents, and Communist Party titan Deng Xiaoping -- was William Gates III. Chairman Bill even outranked Chairman Mao, with the Great Helmsman coming in third. The only person to top Bill Gates was former Premier Zhou Enlai.
All you Gates fans out there, take note -- the Microsoft co-founder's rank might be deceptive. One of the reasons Zhou might be remembered so fondly is because his 1976 death helped trigger the popular uprising that led to the downfall of the hated Gang of Four. But Gates is still very much alive and therefore has no way to match that kind of accomplishment. Surely Zhou's victory deserves a Roger Maris-like asterisk, to indicate that he and Gates were playing in seasons of different length.
And while Gates didn't manage to score so well in Hong Kong, that shouldn't be too much of a worry, since 9 out of the top 10 idols were teeny-bopper Cantopop stars such as Kelly Chan, Nicholas Tse, and Sammi Cheng. The one exception to the Cantopop monopoly in Hong Kong was God. But even the Almighty could manage to squeeze onto the list only at No. 9, sandwiched between Gigi Leung and Cecilia Cheung.
CARING VS. PAYING. Despite critics who see Microsoft as the epitome of arrogance, it seems to be handling Bill Gates's popularity triumph in China with humility. A bemused Olivier Richard, the Hong Kong-based spokesman for Microsoft, seemed surprised to hear the news when I saw him on Friday and then graciously said the Gates victory was really a win for all software companies everywhere. "It's proof that in China, software and IT are not considered insignificant," said Richard. "People really care about software and the importance it has for the future."
Now, if Microsoft could only get them to care enough to pay for it. In 2000, the most recent year for which the Business Software Alliance (BSA) has statistics, 94% of the software in use in China was pirated. That's up from 91% in 1999. In the U.S., the figure is 25%, in Japan, 37%, and in France, 39%. Even India, another Asian giant with poverty even more dire than China, managed to get a 59% score.
"We're still at the beginning of the process," explains Tom Robertson, Microsoft's top lawyer in Asia for intellectual-property issues. He points to signs of progress, such as last year's announcement that the Chinese government was going to require all of its offices to use only legitimate software rather than inexpensive rip-offs.
GREAT STRIDES. Beijing last year also improved its copyright law, as part of its effort to get in line with international standards upon joining the World Trade Organization. "The government has taken important steps," Robertson says. "We're not anywhere [near] where we need to be in China, but we certainly are going down [the right] path."
He might be right. After all, other Asian countries have managed to make great strides in respecting intellectual-property rights. In South Korea, the piracy rate plunged from 66% in 1999 to 50% in 2000, thanks to an intense effort led by President Kim Dae Jung. And India's 59% score in 2000 compares to an 89% figure in 1993. It's no coincidence that in that span of time, India has developed into a software power, with home-grown companies like Infosys, Wipro, and Satyam accounting for a big chunk of the country's exports.
A software industry has a hard time thriving if 9 out of 10 local users don't buy the legitimate stuff. If respecting intellectual-property rights is in the interests of local companies rather than Big Bad Microsoft, the chances of the country getting its act together are much better.
FOLLOWING INDIA. Which leads to one last bit of good news for Microsoft: With his visit to India's IT capital of Bangalore in January, Chinese Premier Zhu Rongji made it clear that China wants to emulate India's success in the software industry. For Beijing to have any hope of succeeding, it needs to lower its piracy rate.
Will China make any progress? We'll soon see, when the BSA comes out with its 2001 numbers. Until then, Microsoft can relish Bill Gates's newfound popularity -- and hope that it's a harbinger for better times ahead in China. Einhorn covers technology from Hong Kong for BusinessWeek. Follow his weekly Online Asia column, only on BusinessWeek Online