Microsoft plans to hire 1,000 more workers in China

Microsoft Corp plans to take an aggressive approach to its expansion in China, a nation that contributed only a tiny portion of the software giant's total revenues despite being the world's second-largest personal-computer market.

The United States-based company plans to add 1,000 employees to its roughly 4,500 staffers in China in the current fiscal year ending June 30, said Ralph Haupter, Microsoft's chairman and chief executive for Greater China.

The hiring will go across its research and development, sales and support divisions, said Haupter, who was appointed Microsoft's China chief in April.

The move is part of Microsoft's efforts to increase its footprint in China, where it sees big potential but where piracy has seriously squeezed profits.

The efforts are aimed at building its presence in the Chinese market, where Microsoft's revenue isn't in line with the large number of Microsoft product users, analysts said.

"It faces a dilemma in China," said Hong Bo, an IT analyst at a Beijing-based consultancy. "The (software-licensing) business model that makes it a success in the US just doesn't work here because of piracy."

Microsoft generates a majority of its revenues in China by providing IT solutions for corporate users, while in the US, consumer purchases contribute a large amount of its revenues, Hong said.

Microsoft declined to disclose its revenues in China.

However, when Microsoft CEO Steve Ballmer visited China last year, he said the revenue in China in 2011 would be only about 5 percent of the company's total in the US, even though PC sales in the two countries were almost equal, according to a Wall Street Journal report.

This suggested Microsoft's revenue in China is close to $2 billion, compared with its US revenue of $36.2 billion and worldwide total of $62.5 billion in the fiscal year ended June 30, 2010.

The company has joined hands with the Chinese government and other software makers to fight piracy.

In January, it sued Gome Electrical Appliances Holdings Ltd, one of China's biggest electronics retailers, for installing pirated versions of Microsoft software on personal computers.

Chinese personal-computer shipments rose 13.5 percent in 2011, and the figure is expected to reach 78.95 million this year, up 9 percent from a year earlier, according to market research company International Data Corp.

It also forecast that China is on track to surpass the US as the world's biggest personal-computer market.

Microsoft will also boost its spending on research and development by an additional $500 million during the period, said Zhang Yaqin, chairman of the company's Asia-Pacific Research and Development Group, the biggest base of its kind outside its US headquarters.