China's Software Biz Takes Root; Government Plan Spurs Field; Country faces big hurdles, such as high piracy rates, but gigantic market awaits.(INTERNET & TECHNOLOGY)

Byline: J. BONASIA

As China prepares to join the World Trade Organization in 2007, its government is racing to modernize computer systems and telecom networks. Along the way, China's home-grown software industry may finally come into its own.

China's software sector has long been immature and fragmented. Most firms there do not meet global quality standards. And piracy is a big concern.

But it also has a vast, untapped domestic market. And there's a huge pool of talent. That's why some experts believe China's software industry is ready to take off.

It helps that the Chinese government is generating huge demand for software, says Robin Roberts, an analyst with Stephens Inc. Government officials see new software as key to streamlining business processes and bringing China into the 21st century.

"Adopting more software is an easy way to jump-start that change," Roberts said.

Software investors should start paying attention to China, says Roberts, since it's one of the few growth areas left for mature software firms.