Software Sales Booming in Asia

But software piracy is still a major problem.

Mark LaPedus

Sales of PC software reached $1.14 billion in Asia last year, a staggering 57 percent growth rate over 1994 (the latest figures available), says the Software Publishers Association. But software piracy remains a major problem in many Asian countries, where the total losses in China alone were estimated to range from $1 billion to $2 billion last year, depending on the analyst or trade organization you talk to.

Both of these trends will bless--and haunt--software companies in 1996 and perhaps beyond. "I don't see a big improvement in China this year," says a spokeswoman for the Business Software Alliance, adding that software pirac y is also running rampant in other Asian c ountries, especially Indonesia, the Philippines, Thailand, and others.

Still, China is perhaps the biggest concern among U.S. software companies, in spite of an intellectual property agreement signed between Washington and Beijing earlier this year. More than 20 outfits in China illegally produce about 100 million CD-ROM discs per year, 20 times the legitimate domestic demand, analysts say.

But enforcement is difficult, if not impossible: Many illegal CD-ROM houses are reportedly owned and operated by China's military, possibly the nation's strongest political faction, according to many sources. This has put Washington and Beijing on a collision course, including a possible trade war.

Ironically, though, China's PC software industry is one of the fastest-growing in Asia. Although it is coming from a smaller base, China's PC software industry hit $4.6 million last year, a 189 percent growth rate over 1994, says the SPA. In fact, Asia's entire software industry is booming. Microsoft and others reported record growth in the region last year. This year? SPA officials declined to project sales figures for 1996, but many software companies indicate they are bullish.

"We're still seeing growth in all sectors of our business," says Christopher Slade, vice president of marketing for Oracle's Asia/Pacific operation, based in Singapore. "We've seen a 50 percent growth per year in Asia-Pacific over the last few years. Applications are growing by 100 percent per year. We don't see a slowdown in the region this year."

In general, the software industry, including PC- and non-PC-based concerns, will continue to grow in the region, especially as several Asian nations begin to deregulate their telecommunications and related industries, Slade says. "There's also been a swing among Asian companies from building their own software products to buying packaged software," he adds.

Japan remains the largest PC software market in Asia, due in part to the explosion in PC sales ther e. Software sales in Japan were $757.8 million in 1995, up 45 percent over 1994, the SPA says.

The next largest market was Australia/New Zealand. Sales in those two countries hit $189 million last year, 21 percent growth from 1994, according to the SPA. Asia's four Tigers--Hong Kong, South Korea, Taiwan, and Singapore--also were robust markets for PC software.

Thailand was the fastest-growing market in Asia. Its PC software industry reached $11.6 million last year, a 277 percent growth rate over 1994, according to the SPA's figures.