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Microsoft says committed to China despite Google pull-back
* Microsoft says in the midst of major China R&D push
* Shanghai, Beijing R&D centres could house up to 15,000
* Expending efforts to develop Bing search in China
By Chen Min and Melanie Lee
BOAO, China, April 10 (Reuters) - Microsoft (MSFT.O) remains strongly committed to China, even after Google's (GOOG.O) recent decision to shutter the China-based version of its search engine over censorship issues, a top executive said.
The U.S. software giant is planning to spend $500 million this year alone on its fast-growing research and development complex in China, said Zhang Yaqin, corporate vice-president in charge of the company's R&D activities in China.
"Microsoft puts great importance on China's development," Zhang told Reuters on the sidelines of the Boao Forum on southern China's tropical Hainan island. "China has been a sales center for Microsoft from early on, and later became an R&D center. Now it is a strategic center."
He said a Microsoft R&D center in Shanghai would be able to house up to 1,500 people in its first stage, eventually expandable to 7,000. The company was also putting its Asia R&D headquarters in Beijing, he added, at a centre now under construction that will be able to accommodate 8,000 researchers.
Microsoft is active on a number of fronts in China. Apart from software sales and R&D, the company also operates instant messaging and other Web services in China, including a Chinese version of its highly-hyped Bing search engine that it hopes will someday take on Google.
Last month, Google announced that it would close its Google.cn search engine following a hacking attack that it believes originated in the country. The move was also a protest over China's heavy-handed policies that require all website operators to filter results on sensitive topics like Tibetan independence and the banned Falun Gong spiritual movement.
Despite closing its search site, Google still operates its own R&D center in China, and sells advertising there for its Chinese language search sites.
Microsoft launched a beta version of its Bing search engine in China last June, but has yet to pick up any major share from market leaders Google and homegrown search engine Baidu (BIDU.O), which collectively control more than 90 percent of the market.
"Bing's technology and markets have just started to develop," Zhang said. "In China we are already expending a big effort in this. Even though we are still well behind the market leaders, we need to become even more committed and be patient."
"Bing has huge potential, so we are very optimistic about the future," he said.
China has the world's largest Internet market by users, with 384 million at the end of last year, according to government statistics.
The value of China's search market rose 38.8 percent in 2009 to 7.15 billion yuan ($1 billion), on the back of greater Internet penetration, said research firm Analysys International. Baidu had 60.9 percent of the market by revenue, while Google (GOOG.O) had 31.8 percent.
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