Microsoft says committed to China despite Google pull-back

* Microsoft says in the midst of major China R&D push

* Shanghai, Beijing R&D centres could house up to 15,000

* Expending efforts to develop Bing search in China

By Chen Min and Melanie Lee

BOAO, China, April 10 (BestGrowthStock) – Microsoft (MSFT.O: ) remains
strongly committed to China, even after Google’s (GOOG.O: ) recent
decision to shutter the China-based version of its search engine
over censorship issues, a top executive said.

The U.S. software giant is planning to spend $500 million
this year alone on its fast-growing research and development
complex in China, said Zhang Yaqin, corporate vice-president in
charge of the company’s R&D activities in China.

“Microsoft puts great importance on China’s development,”
Zhang told Reuters on the sidelines of the Boao Forum on
southern China’s tropical Hainan island. “China has been a sales
center for Microsoft from early on, and later became an R&D
center. Now it is a strategic center.”

He said a Microsoft R&D center in Shanghai would be able to
house up to 1,500 people in its first stage, eventually
expandable to 7,000. The company was also putting its Asia R&D
headquarters in Beijing, he added, at a centre now under
construction that will be able to accommodate 8,000 researchers.

Microsoft is active on a number of fronts in China. Apart
from software sales and R&D, the company also operates instant
messaging and other Web services in China, including a Chinese
version of its highly-hyped Bing search engine that it hopes
will someday take on Google.

Last month, Google announced that it would close its
Google.cn search engine following a hacking attack that it
believes originated in the country. The move was also a protest
over China’s heavy-handed policies that require all website
operators to filter results on sensitive topics like Tibetan
independence and the banned Falun Gong spiritual movement.

Despite closing its search site, Google still operates its
own R&D center in China, and sells advertising there for its
Chinese language search sites.

Microsoft launched a beta version of its Bing search engine
in China last June, but has yet to pick up any major share from
market leaders Google and homegrown search engine Baidu
(BIDU.O: ), which collectively control more than 90 percent of the
market.

“Bing’s technology and markets have just started to
develop,” Zhang said. “In China we are already expending a big
effort in this. Even though we are still well behind the market
leaders, we need to become even more committed and be patient.”

“Bing has huge potential, so we are very optimistic about
the future,” he said.

China has the world’s largest Internet market by users, with
384 million at the end of last year, according to government
statistics.

The value of China’s search market rose 38.8 percent in 2009
to 7.15 billion yuan ($1 billion), on the back of greater
Internet penetration, said research firm Analysys International.
Baidu had 60.9 percent of the market by revenue, while Google
(GOOG.O: ) had 31.8 percent.

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Microsoft says committed to China despite Google pull-back