Computer Firm Targets China Despite Piracy Issue, Computer Associates Sees Opportunity

U.S.-based Computer Associates International Inc., the world’s second biggest software company, is targeting Chinese companies, despite problems of piracy that plague other software firms.

“The intersection of the opportunity and what we can provide seems to be right at this point and that’s why we’re excited” about China,” the company’s chairman and chief executive officer Charles Wang said in a Bloomberg Forum.

The company last week signed contracts to supply software to the Ministry of Communications, the China National Petroleum Corp., and the country’s overseas broadcaster, China Radio International.

Computer Associates’ announcement came the same week that U.S. Assistant Trade Representative Lee Sands was in Beijing to review China’s efforts combat piracy and attend a computer trade show. The International Intellectual Property Alliance, which represents many U.S. software makers doesn’t think the Chinese government is doing enough.

But Wang, who is on his first trip to China since his family fled Shanghai in 1952, is undeterred. He said his company expects sales to the People’s Republic of between $3-$4 million during the fiscal year ending March 31, 1996.

Wang and three partners founded Computer Associates in 1976. Last year, revenue topped $2.6 billion, mainly on sales of software for mainframe computers, making it the second biggest software company in the world after U.S.-based Microsoft Corp.

Sales of software for mainframes accounted for about 70 percent of the Islandia, New York-based company’s profits, down from about 95 percent four years ago, Wang said. Wang said his company’s business in China is not affected by the illegal copying dogging other software companies, both domestic and foreign.

For example, as much as 95 percent of the Microsoft-labeled software sold in China is pirated, Microsoft officials say.

Users of Wang’s software are less likely to use unauthorized copies. “We make software that runs people’s business,” he said.

“Our software is really the one where you need the support, the service that comes with it, because if our software goes down, your business stops,” Wang said.

Despite China’s rapid economic development and the increasing use computers there, it may be “many years” before China has a major impact on Computer Associates’ bottom line, he said.

A U.S. industry group, the Software Publishers Association, said last month its members sold $2.7 million of goods to China in the first half of 1995, in contrast to $376.3 million to Japan and $91.4 million to Australia and New Zealand.

China sales were, however, 322 percent higher than for the same period last year.

Wang declined to provide estimates on the company’s second-quarter profits and expressed confidence in the vitality of the mainframe computer market, which some have doubted as the popularity of personal computers grows.

Computer Associates reported first-quarter net income of $88.5 million, up 28 percent from $68.9 million a year ago. Revenue rose 21 percent to $577.5 million from $476.6 million.