The number of PCs in China is expected to increase to 35.1 million by 2003. The number of independent software firms increased from 2,000 in 1999 to 5,000 in 2000, employing more than 150,000 software engineers. Around 30,000 students majoring in software engineering graduate annually. The industry is supervised by MII, which is responsible for drafting laws and regulations and setting technology standards. MST and MII offer favourable policies including tax concessions and loan facilities to software firms.
Some privileges are also extended to foreign entities engaged in product development in the parks.
The policies provide preferential measures for software export, support the use of original software, and give income tax concession to software enterprises. In light of China's WTO accession, its manufacturing and services sectors need more IT applications to enhance their competitiveness against foreign competition. For example, a manufacturer could utilise the technique of case-based reasoning, neural network or fuzzy logic to enhance its design capability. Moreover, the computerisation of various government departments also provides huge business potential. Foreign Participation Foreign software firms have advantages of years of development experience and they have an edge in operating systems, development tools and game software.