Leonard Liu, CEO of Augmentum, disagrees with pundits who say Chinese technology companies can not innovate in software development.

"China is destined to be among the top three countries in software development," said Liu during Dasar's Red Herring Asian Technology Roundtable Exhibition in Beijing yesterday.

According to Liu, America has technical leadership and a skilled workforce and can currently better integrate the open source software movement. He says China is poised to be a better offshore software developer than India, and Liu says leading players for embedded software will be fostered in China because it is the center of manufacturing around the world.

However Liu told attendees that IP risk, lack of scale, and lack of global deliverability capabilities are challenges for China to grow its software sector.

Liu suggests that companies try to localize in China. He says Augmentum only has local Chinese managers and does not hire expatriates or Chinese returnees.