When I began to build our website, I went to Microsoft's website to buy SharePoint Designer 2007.  It gave me an option to download a trial copy from their U.S. website, so I did.  Three months later when I tried to convert to a bought version, I have found it impossible to do so.  My knowledge, to date, after 30 emails to support, several phone calls to the U.S., and even 3 emails to Bill Gates, is that I cannot do it.

Their best suggestion was to buy from their Chinese site, which has led to a fortuitous discovery.  If I buy from the Chinese website, besides the fact that I need a Chinese bank to do so, it will cost me about $500, which is 66% higher than the price, in the U.S.

Now, I really understand why no one in China buys genuine software.  I have been seeing fake software of every variety since I moved to China.  It usually costs about Y8, and who ever is copying it is still making money at that price, including nice packaging.  Here, in China, that amount of money can buy you lunch.  The Y3,000 price tag that MS has on its Chinese version of SharePoint represents about 3 months' rent, in a city like Guangzhou, which is comparable to Philadelphia, in terms of rental costs.  To me it shows that Microsoft has no clue about China.  Even in the basic economics courses that I teach at South China University, my students can tell you that the price you charge has a point at which you will maximize profits: below or above will lead to lower profits.  At that price, I am sure that MS has very little sales, in China, compared to what they could have.  They only encourage fake copying and buying fakes because only the very wealthy, in China, could afford that price, and lets face it: if Chinese pirates can make money by selling it at Y8, MS could make a lot more money, if they priced things right for the China market.

IKEA, on the other hand, has the right idea.  Here, people think that IKEA is the ultimate in home furnishing.  I bought a really large and really nice glass-top coffee table for Y500, here in China, which is somewhat luxurious for a Chinese purchaser but not ridiculously so.  Moreover, I am sure that the same table would be sold, in the U.S., for, maybe, $500, and I would be willing to pay that, even here.  But IKEA has the right idea.  They are making furniture, in China, and their costs are based on Chinese labor and materials cost, which ultimately go into purchasing power of the workers, here.  In turn, their store is always full when I go into the store, in Guangzhou, and I'm sure that they are doing a great business, here, unlike MS, which will never be able to penetrate this huge market with their pricing strategy.

I always knew that MS products were not that good compared to other software that my friends tell me that they use.  Now, I know that their business strategy is even worse than their products.  I always thought that IKEA was smart for making decent furniture for a reasonable price, but now I appreciate their business sense even more.

You can read more about our thoughts on business, investment, and business, in China, and in the world on our website Red Hill