Chinasoft predicts software shakeout

Beijing-based Chinasoft, one of the country's leading software houses, expects to the market increasingly concentrated in the hands of the top three players over the next few years. The company, which is set to make three international acquisitions soon, is also expecting to transfer its listing to the main board on the Hong Kong stock exchange. The deals for another Chinese company, a US company and a Japanese company, will set Chinasoft back HK$134 million in cash but will boost the size of the company from its present 1,800 strong workforce to an estimated 5,000 following the deals. At this time last year Chinasoft, which is partly owned by Microsoft, employed only 500 people.

China's software market is notoriously fragmented with around 10,000 software houses and the top ten firms accounting for less than 20 percent of the market. However, Chinasoft managing director Henry Chen Yuhong predicted business concentration over the next three years that could see the top three companies in the country - one of which he expects to be Chinasoft - to share between 60 and 70 percent of the market.

CMI - 22/8/06