The Ministry of Information Industry says that of the 410000 different software licenses purchased by provincial governments in the last year, 70% are from Chinese software enterprises.

According to Xinhua reports, Kingsoft has won orders for its WPS Office software from nearly all the provinvicial governments in China, and now its market share has exceeded that of Microsoft's (MSFT) for the first time.

However, of the CNY250 million that Chinese provincial governments spent last year on purchasing software, only CNY61.2 million was used to buy domestic software. One reason for this difference is that overseas software usually costs much more.

One way Chinese software companies have achieved success is they have avoided direct struggles with Microsoft and instead have made their products compatible with Microsoft's operating system.

Yet Microsoft is constantly changing and its recent strategy to reduce prices in China might encourage more Chinese purchase departments to rely on Microsoft again.