Microsoft Opens the Gates: Patent, Piracy, and Political Challenges in China

On the other hand, knowledge of the political and legal environment of China will be fundamental. Information on their laws and regulations, such as foreign trade policies, product standards, tax laws and requirements, trade barriers, labor laws, etc. are extremely important when assessing China as a potential market for our company. Finally, a thorough research on China’s market conditions, such as potential competitors, market trends, market opportunities and threats, potential risks, unique market characteristics, etc. will be necessary to obtained a complete evaluation of the country before entering the market.

The Justice Department maintains that the most critical concern involved Microsoft’s agreement to license a code to other companies, which allows rival products to communicate with Windows software. As of January 17, 2004, only eleven companies have chosen to license this code, most of which are not much competition for Microsoft. In addition, many companies are accusing Microsoft of demanding unreasonable fees and tedious restrictions for the code license (Krim, 2004).

The economy in China is doing well. China has in its recent years reached financial stability. This is due to the fact that there is a high level of domestic demand. Because of this, many companies around the world begin to invest in the Chinese market. China is also one of the fastest growing when it comes to Information Technology and has been able to attract companies such as Google and even Microsoft. It has been forecasted that the Internet industry in China is expected to increase at a rate of about ten percent within the next five years. This is great news because Google will be able to benefit.

China is the largest market in the world, and probably the hardest business environment. This narrative reflex China’s immense diversity, complexity, and its enormous competitive intensity is unrivalled versus the world.

This paper presents the results of the authors’ detailed research into competition between multinationals and local Chinese companies in 10 industries over the past five years. They conclude that local companies are now threatening multinationals’ plans to conquer the China market. They analyse this new competitive game in terms of a dynamic battle of competencies. Multinationals start off with better industry-specific technology and know-how, and a higher level of competence in key functions like marketing and financial management. Chinese companies enjoy a better understanding of the local market, lower

1. What are the implications of China’s exchange rate policy on doing business with and “against” China?

Microsoft was founded in 1975 by founder Bill Gates, a former Harvard drop out (Lawrence, 455). The business grew and controlled 90% of the market for operating systems, with revenues of over nineteen billion dollars per year (Lawrence, 455). In the nineteen nineties, the Internet generation was starting to explode and Microsoft new that it would be a profitable market. This led to their approach to develop a new product to handle this revolution. Their solution was Internet Explorer, which was created in 1995 to allow its users to access the World Wide Web

laws are changing more rapidly now that China is seeing foreign companies show up. China is

Microsoft's struggles might seem somewhat perplexing, given its stunning success with Windows and the fact that it seems to have pursued a 'related linked' diversification strategy of primarily concentrating on products 'linked' to technology. It has not acquired businesses that are fundamentally anathema to its core product. "Companies' implements related diversification strategies in order to achieve and

Microsoft and its supporter’s claims that they are not breaking any laws, and are just

Microsoft had to split their operating system company from the rest of their organization. Another action Microsoft took was its relations with Java. They licensed a version of Java that worked mainly with windows where they tried to drive out the competitors and in later years they didn’t even allow Java to work with Windows XP (Rivkin 4). Microsoft tried to basically kill Java and with this the producers of Java sued Microsoft. Last, Microsoft took actions toward their competition in open-source software: Lunix. Microsoft responded by opening up into own server OS code like Lunix did. They actually sold stripped-down versions of the code to emerging economies and they also set up a lab that’s sole purpose was to find competitive weaknesses in the Lunix OS (Rivkin 5).

With China emerging as a global power in business within the last decade, knowing about doing business in China has become more important than ever. There are both many advantanges and challenges with doing business in China in this modern era, and understanding both sides of this coin is the key to being successful in China. Some aspects to keep in mind include the cultural barrier, the price of the work force in China compared to the United States, and have the “made in China” brand be accepted back in the United States.

China’s accession to the WTO in 2001 has helped shape its economy to becoming a more predictable environment for trade and foreign investment. Corporate governance and frameworks for business operations and interactions have improved, providing a much more transparent environment. (Deckers, 2004)

This site contains information on China's patent and copyright law. It goes on to discuss some ethical issues about China's lack of law enforcement on intellectual property protection.

Political & Legal environment: The political system of a country is an important part of a companies marco-environment. ‘Who governs the country?’ ‘What does the government follow?’ and ‘What legal regulations follow from these policies?’. The most important factors a company is subject to are policy uncertainty, macro instability, and tax rates. Considering China is a country in transition all of the above factors are subject to change, to a degree substantially larger than it is in stable developed countries. We have recently seen changes happening in China on all of the above factors. One example is the new regulations regarding copying, which turned out in favor of Starbucks. However, what will happen in the (near) future is hard to tell. Whatever happens though, Starbucks will be subject to the consequences, whether positive or negative.