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Tech companies adjust focus to recapture growth

Updated: Nov 23,2015 9:00 PM     China Daily

Amid downward pressure on China’s economic growth, traditional companies in Beijing’s high-tech zone are seeking higher profitability by changing their focus to an Internet-oriented model and adopting high-end manufacturing.

Hundreds of software companies in Zhongguancun, a nationally renowned high-tech hub in the capital, collectively earn billions of yuan every year. But after a boom of more than 20 years, many saw a sharp decline in revenue and net income in recent years. They are eager to adjust their operations to cater to an Internet-savvy population of more than 668 million users in the new “Internet Plus” era being heavily promoted by the central government.

China’s Internet Plus initiative promotes the integrated development of the Internet and traditional factories and companies to reduce cost and expand markets.

Kingsoft Security Software Co, founded 27 years ago, is among the leading software producers adapting to the mobile Internet. Zhang Hongjiang, CEO of Kingsoft, said the company has changed its focus from the traditional software industry in an effort to boost profitability.

Kingsoft makes products specifically for computers, such as word processing software and anti-virus software. Its subsidiary, Kingsoft Software, was listed on the Hong Kong Stock Exchange in 2007, based on the high profitability of traditional software engineering.

As the Chinese government has cracked down on illegal copies that violate intellectual property rights and promoted software made by Chinese companies, the word processing system Kingsoft developed has increased its market share. As many as 90 percent of government departments, 70 percent of central State-owned enterprises and 40 percent of Chinese banks have adopted its software.

“Now all Kingsoft’s businesses have added Internet-oriented services,” Zhang said.