Microsoft (MSFT) China has signed a memorandum of understanding with Alibaba to carry out strategic cooperation on e-commerce and information technology services targeting medium and small enterprises, as well as e-commerce organizations.

The parties will cooperate on the development and planning of online services for e-commerce, enterprise management, office automation and enterprise communications. Their achievements will be released through Alibaba's online software service platform, which is currently under construction, and to be used by 20 million middle and small enterprises who will pay for the software according to demand.

In addition, they will be engaged in developing innovative application software for the enterprises and focus on mobile computing.

Alibaba's online software service platform will be launched in the second half of this year. It is estimated that the fee for using the platform in the initial period will be about CNY10,000 each year and will be renewed annually.

Statistics show that by the end of 2006, there had been more than 29.5 million medium and small enterprises in China, accounting for 99.5% of the country's total, and less than 20% of them were using software for enterprise management. By the end of March, Alibaba had 19 million registered users.