Microsoft in Chinese Market

Microsoft had hard time doing business in China after entering it in 1992; the company’s business was a disaster there for a decade. Microsoft noticed then that none of the basic principles, guidelines and strategies that were successful in US and Europe made sense in China. Then Bill Gates’ company had to cut prices tremendously, and followed the un-Microsoft-pricing strategy by charging Chinese consumers the 1/50th of the regular retail price charged anywhere else. Thus, Windows operating system and Office applications were sold at 3$ instead of charging hundreds. Microsoft also abandoned the protection of its intellectual property at all costs and Gates has been amazingly tolerant of China's counterfeiters. This gained him a further admiration. If Microsoft has followed those tactics, it’s because they have found in Chinese market, potential and numerous consumers of Microsoft products. Around 90% of the 200millions Chinese computers are using Windows, and approximately 600 to 700 millions in Asia. Thus, if Microsoft sells software at 3$, they are generating profits by multiplying it by the huge number of buyers. Bill Gates is the idol of Chinese youth, they are extremely impressed by him, they use his software and they read his book “The Road Ahead” that was translated into many languages including Chinese. In China, the Microsoft Chairman is bigger than any movie star. Chinese people prefer him to any other government leader. The president of China, Hu Jintao, told Bill Gates "You are a friend to the Chinese people, and I am a friend of Microsoft. Every morning I go to my office and use your software".