There may be few executives in Microsoft who are more capable than Craig Mundie to talk about the US software giant's China strategy.

The chief research and strategy officer of the world's biggest software company has been the decision-maker for the company's China strategy for 13 of the company's 18 years in the China market.

During that period, Mundie not only completely changed the way Microsoft did business in China but also, through years of preaching, helped China to realize the importance of protecting and respecting intellectual property rights.

Under his leadership, Microsoft is also one of few foreign technology firms that gets public support from the Chinese government.

Microsoft struggled for years after entering China in 1992. Its business was a disaster for a decade because of piracy. At that time, the company fought bitterly to protect its intellectual property and sued companies for using its software illegally, although its accusations seldom received support from the courts. Its relations were strained with the government. The company changed five China general managers over a five-year period, two of whom later wrote books criticizing the company.

"From 1992 to 1998, we had a very simple view of selling our traditional products as packaged software into the massive PC market in China," said Mundie. "When I arrived I recognized that the company had no program of trying to align the evolution of our business with the evolution of the Chinese market, and particularly the stimulus and planning of the Chinese government."

Microsoft then changed its China strategy. The company promised to help China to develop its own software industry, hoping this would make China more active in protecting intellectual property rights for its own sake. The company built a research center in China, demonstrating its long-term commitment to the country.

Microsoft also developed its own five-year plan to keep in line with Chinese government agencies such as the National Development and Reform Commission and the Ministry of Industry and Information Technology.

Mundie said this helped Microsoft to better align itself with the growth in the China market. The rise in the number of personal computers in China has been explosive because of wider access to the Internet in recent years.

Over time, Microsoft intensified its efforts to report piracy and the moves received a better response from the government. In the spring of 2008, when President Hu Jintao visited the United States, his first trip was to Microsoft in Seattle.

"That was a demonstration that while we had our challenges, they recognized that we were here making a long-term investment, diversifying that investment," Mundie said.

When talking about the next 10 years of Microsoft's development plan in China, Mundie said the piracy problem is still Microsoft's biggest challenge from an economic point of view. But the new challenges arising from the company's new products and services, such as Kinect and cloud computing services, don't fit comfortably in the regulatory environment found in China.

He hopes that as Chinese regulators here understand more of the rapidly evolving global Internet scenarios and technologies, some of the obstacles will disappear.

(China Daily December 20, 2010)