Sharpening China's digital edge

Under Ralph Haupter, Microsoft's local unit aims to transform businesses with advanced IT

The man in charge of Microsoft Corp's China business thinks the recently announced national strategies to boost the information technology sector will provide the world's biggest software maker with greater opportunities, despite a slowing economy.

Ralph Haupter, chairman and chief executive of Microsoft Greater China, is also eyeing technologies like augmented reality and virtual reality, with demand for both rising in China.

"I feel very confident Microsoft can be a key player and a key contributor in that digital transformation of the industry in China," says Haupter, the first non-Chinese CEO of the company's China operation since it entered the country in 1992.

"I'm deeply convinced that Chinese companies will very much focus on how digital technology will transform their business. Microsoft can play a pivotal role in this development."

China is pushing forward supply-side reform, cutting back overcapacity and improving efficiency and quality in manufacturing and many other sectors to stimulate economic growth.

Premier Li Keqiang said during an annual political meeting in March that the reform will be a key strategy in the country's 13th Five-Year Plan (2016-20).

"For me, (this reform means China) is moving from a pure production-oriented key performance indicator model to a real market-oriented model, where you very much focus on the demand and try to optimize supply and production toward demand," Haupter says.

It will be a smart way for China to beef up competitiveness and technology innovation, which are the key pillars for real growth in markets, he adds.

China is seeing the weakest growth for 25 years. The world's second-largest economy grew by 6.9 percent last year, the slowest pace since 1990. China has set a growth target of 6.5 to 7 percent for 2016.

Haupter says China is steering its economy in the right direction at a fast pace.

"More than 6 percent GDP growth is still very strong," he says, adding that his company will focus on producing value for customers and helping to improve their business. "This will always be the sweet spot of contributing to the benefit of China, to the benefit of Chinese companies."

On AR and VR, he says, "Some think they will be very strong on the gaming side. I believe there is a lot of opportunity on the engineering side, on the production side." The technologies have great business potential in many areas from traffic management to real estate and tourism, he adds.

Microsoft is developing VR technologies and has introduced a VR headset, HoloLens.

Haupter says the company will partner with Chinese developers to expand the scenarios where the HoloLens can be used. "We're just opening a chapter of different opportunities - going forward with the technology of HoloLens."

Finding local partners has been one of the biggest achievements for Microsoft in China. Before arriving in the company, Haupter used to help the software giant find new partners in Europe, the Middle East and Africa.

Wu Lianfeng, associate vice-president of IDC China, a market intelligence company, says policy restrictions and stronger domestic competitors mean foreign IT companies will need to join hands with local partners to explore business opportunities in China.

In 2013, a year after Haupter took over at Microsoft China, the company introduced its cloud service with Shanghai-based 21Vianet Group Inc. The cloud computing market in China is closed to sole overseas providers.

In December, Microsoft also set up a joint venture with a state-owned technology firm, China Electronics Technology Group, to bring Windows 10, the company's latest operating system, to the government procurement market.

"We want to deepen the footprint of our business in China, having entered the market more than 20 years ago," Haupter says.

He says the joint venture has received its first government customers, while its first product, running on Windows 10, is being tested.

"Our technical people are working with Chinese officials to deliver a product that meets the needs and requirements we were asked to deliver," he adds.

In the consumer market, Microsoft has several Chinese hardware partners that are making personal computers and mobile devices running on Windows.

Hardware makers in Shenzhen, an electronics manufacturing hub in Guangdong province, have developed about 200 devices running on Windows that are exported to 53 overseas markets. Microsoft says total sales have reached 6 billion yuan ($923 million; 809 million euros).

Last year, the company announced an unlikely partnership with Xiaomi Corp, a top Android device maker that had not previously launched Windows-based products. In a mobile market where Apple Inc's iOS and Google Inc's Android are in control, getting the biggest Android phone vendor to accept Windows was considered a big achievement.

"What I like in our partnership with Xiaomi is that they have a fantastic way of reaching out to the users to improve their product on an ongoing basis with customer feedback," Haupter says.

He says the partnership will enable the two companies to jointly make products that customers are interested in and willing to pay for.

gaoyuan@chinadaily.com.cn

Bio

Ralph Haupter

Chairman and chief executive of Microsoft Greater China

Born: Stuttgart, Germany

Current role: Microsoft corporate vice-president, CEO of Greater China region

Previous positions: Vice-president of Microsoft Germany

Education:

1992: Bachelor of engineering

1998: MBA

Marital status: Married with two children

Hobbies: Skiing, biking, golfing; also a semi-professional musician for about 10 years

(China Daily Africa Weekly 05/13/2016 page30)