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Microsoft Expands Presence in China

March 10, 1999

SHENZHEN, China (AP) _ Microsoft Corp., eyeing a restricted but rapidly growing computer market in mainland China, said Wednesday it will start offering systems to let the Chinese download movies, music, e-mail and other services.

``It will really open up Internet usage in a dramatic way,″ Microsoft boss Bill Gates said at a signing ceremony in this booming southern border city not far from Hong Kong.

Microsoft is banking on electronics manufacturers to install the necessary hardware in their products that are distributed across China. The end-users of services provided by the so-called ``Venus″ project will get connected to the Internet in a partnership between Microsoft and China Telecom.

Gates issued a statement lauding `the benefits this new, specialized system can bring to the Chinese customer,″ although Microsoft stayed vague about many of the details.

Gates held a press conference in Shenzhen where he told local reporters that Internet growth in China was encouraging. Otherwise, he kept his distance from the Western media, both in Shenzhen and a day earlier in Hong Kong, where Microsoft announced a similar deal with Hongkong Telecom.

Foreign journalists were kept cordoned off at Wednesday’s press conference, preventing them from questioning Gates. On Tuesday in Hong Kong, he refused to answer any questions directly from reporters, choosing instead to field only written questions that had been screened by his public relations advisers.

It is unclear how broad Microsoft’s reach can be in a huge nation where the Internet has posed touchy policy questions for authorities who are at once encouraging its growth while also trying to keep tight controls on information.

Despite various controls and threats to information dissemination in China, Internet use has soared. Users topped 2.1 million in 1998, a fourfold growth in a year, and another 1.5 million accounts are expected to be opened this year.

High-tech analysts believe the growth is unstoppable.

A public relations adviser for Microsoft, Jenny Liu, would not say how many customers Microsoft is hoping to get in China. Nor would Microsoft discuss how much money it is investing in deals it was signing Wednesday with seven companies on the mainland.

Microsoft’s venture is the second of its kind in China for the U.S. software giant.

The first such Microsoft project was launched late last year in Shanghai but offers its services only through small, handheld computers.

Piracy of software and other Western high-tech items is a perennial problem in China, but Microsoft said Wednesday that in its latest dealings it has signed an anti-piracy agreement with Shenzhen, a booming southern border city not far from Hong Kong.

Microsoft will provide software for the Shenzhen government so it can go online.

The deal comes at a time when the Chinese government has been seeking to control the Internet and other innovative forms of telecommunications and multimedia services both for the sake of profit and to block the use of such services for political dissent.

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