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HP pumps $200 m into China

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CIOL Bureau
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SHANGHAI: Hewlett-Packard Co. expects to invest $200 million by 2007 to expand its business in China, hoping to sell software to power everything from billing systems to share transactions, a senior executive said on Monday.



Despite the threat of piracy, HP is hoping to increase its share of a projected $4.4 billion of spending on IT services in China this year, according to global tech consultancy IDC.



"You're probably looking at, easily, around $200 million...(over) the next five years," Siaou-Sze Lien, senior vice president for HP Services Asia Pacific, said in an interview, adding that investments should be completed by 2007.



HP Services, the software solutions arm of a U.S. computer server vendor whose businesses range from personal computers to printers, also sees revenue doubling in China over the next three years on the strength of the telecoms and financial services areas.



"We certainly have seen the growing demand of the next generation of financial systems," Lien said.



To meet this demand, HP will open a software centre in Shanghai, China's commercial hub, in December to demonstrate and market financial services products to potential clients, which could include the country's two stock exchanges and commercial lenders.



About 11 percent of HP's revenue, or some $2 billion, is generated in the Asia Pacific. The company does not provide breakdowns for China.



HP, which has invested over $500 million in China since 1985, counts domestic financial giants like China Construction Bank and China Life Insurance Co Ltd, as well as multinationals such as General Motors Corp., as its customers in the country.



Lien said HP wants to work with local software developers, and already cooperates with China's biggest PC maker, Legend Group Ltd., on product distribution.



YOU'RE NOT ALONE



Securing local partners is crucial to navigating China's huge but still largely government-dominated financial services and telecoms sector, she said.



"It's like trying to cross a big crossroad -- it's scary. The best way to do that is to hold hands with a couple of friends so that at least when you get knocked down you're not the only one," she said.



One of the most promising areas was providing solutions to players in a nascent but rapidly expanding credit card arena.



Domestic banks are trying to tap a virgin retail market in a country where credit cards are still a novelty, but a rising affluent class is becoming acquainted with borrowing.



"This is still very much a cash place rather than a credit card place. But moving forward, definitely I think that will change," Lien said.



HP, the first U.S. electronics firm to be invited to China for trade talks in 1972, employs around 3,000 people in the country, some 80 percent of whom work in the IT services sector.



Despite the country having a reputation as a haven for pirated software -- knock-offs are widely sold on the streets for less than a dollar -- Lien said she was not overly worried.



"There's no need to be paranoid and say just because it's a problem we don't want to enter this marketplace," the Singapore native said. "If you continue to innovate faster, you will always have a first-mover advantage to get market share."



© Reuters

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