China's software products are hoping to become more competitive in the world market after government authorities recently announced that the nation's software companies will enjoy a complete rebate on all export taxes from now on.
According to a new policy arrived at by the State Administration of Taxation, the Ministry of Foreign Trade and Economic Cooperation and four other government bureaux, China's software companies will now have all the money they pay in export taxes returned to them after their products are successfully exported abroad.
The move is an attempt by Chinese trade authorities to help home-made software products compete with foreign products on the international market by reducing costs, and hence reducing prices.
In addition to being eligible for the tax rebate, all software companies that have registered capital of more than 1 million yuan (US$120,000) will have the right to export their products directly overseas, under the new policy.
This news has been warmly welcomed by small and medium-sized software companies that previously had to go through other foreign trade companies to get their goods on the world market.
China has more than 10,000 software companies at present, but most of them are quite small in size and employ less than 50 people.
According to experts, the policy hugely increases the potential export base for a currently sluggish software sector.
The policy also says software exporters will be able to ask for government subsidies to expand their exports.
China's software industry saw total estimated sales of 20 billion yuan (US$2.4 billion) last year.
Actual export numbers have not been released yet, but analysts with CSIA said they will be quite small.
At present, the software industry contributes only 2 percent to the country's gross domestic product, according to Zhu Pengju, a researcher with CSIA.
After the Windows operating system invaded the Chinese market and began dominating a decade ago, domestic software makers have had to make their livings in the shadow of the giant Microsoft.
Zhu said computer software and hardware sectors traditionally play equal roles in contributing to economic growth in most developed countries, while in China, the situation is severely imbalanced, with the hardware industry doing five times as much business at the software industry.
(China Daily 02/15/2001)
