Software juggernaut Microsoft has signed an agreement to gain a foothold in the world's largest market, China.

According to the official Xinhua news agency, China's largest public telecommunications provider, China Telecom, has agreed with Microsoft to jointly develop a special Internet browser, dubbed "Internet Explorer China."

The project marks the beginning of a long-term co-operative programme between Microsoft and China's Ministry of Post and Telecommunications (MPT), which runs China Telecom.

Building close relations with the government

A close relationship, or guanxi, with the Chinese Government could be invaluable to Microsoft where a successful business depends on having the right connections.

Statistics from China's Ministry of Post and Telecommunications show China had 620,000 subscribers to the Internet at the end of 1997. (Britain currently has about 2m users.)

But with a population of over 1bn, China's market's potential is incalculable.

The announcement comes just weeks after the company backed down in the face of US Justice Department accusations of anti-competitive practices in its battle to win control of the Internet browser market.

Its arch-rival, Netscape Communications, as well as a host of other computer makers have complained to US authorities that Microsoft uses its dominance in the software market to squeeze any viable competition.

Nevertheless, at least in China, Microsoft appears to be continuing its aggressive push.

According to the deal, subscribers to the Internet through China Telecom will receive "IE China" free in an attempt to encourage use of the company's public multimedia telecom service.

China Telecom will also use other Microsoft technology in information system applications, and Microsoft will be involved in online skills training.
 

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