Microsoft to invest $1 billion in China R&D

Global software giant Microsoft plans to spend $1 billion over the next three years on R& D in China, according to Simeon Leung, the newly appointed chairman and chief executive officer for the region.

The decision is seen as a major move in a key market that is facing uncertain economic and political conditions.

Leung, who was with Motorola Inc prior to taking charge at Microsoft, has more than 20 years of leadership experience heading multinational companies in China and Asia. At Microsoft, Leung has his task cut out for him. He will oversee an ambitious local research and development programme - an initiative that runs counter to the trend among peers in the region cutting back significantly on R&D spending.

Intel Corp,  the chip giant, has already scaled down its estimated $2.9 billion R&D spend for the fourth quarter. The investment, which will focus on human resources and other R&D related investment, is expected to greatly boost information technology innovation in Microsoft and in China, according to Zhang Yaqin, chairman of the company's China research and development group.

Leung will also formulate and drive overall business strategy across all businesses to address market demands as well as the goals and objectives of the company. Additionally, he will be responsible of creating synergy among different groups and operations within Microsoft in Greater China. 

Microsoft has a presence in China that dates back to 1992. One of the first multinationals to set up shop in the country, the company has helped foster  the growth of a healthy IT ecosystem in line the with policies of the Chinese government. According to a recent IDC study, every dollar of Microsoft revenue    generated in China also generates $16.89 for third-party IT companies in that country.