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David Fu, VP and General Manager, Greater China Business, Unisys

David FuIT companies are flocking to China, which is considered by many to be the biggest growth market in the world today. IBM , Cisco and Motorola are just a few of the large multinational companies that have been trying to boost their presence in the most populous country on the planet.

With the Chinese government easing its restrictions on imported hardware and software, like the deal struck between the United States and China to end Value Added Taxes on imported integrated circuits in July, it's getting easier for companies on the outside to conduct business inside China.

Another company looking to do more business in China is Unisys , a one-time mainframe company that in recent years has expanded its portfolio to become a services provider, providing consultation, systems integration and business process outsourcing assistance to companies throughout the world.

David Fu assumed control of Unisys' Greater China operations in September as vice president and general manager. Fu, who in the past has worked in other multinational firms with operations in China, such as AT&T , Bank of America and Equant Network Services, talked to internetnews.com about the role Unisys -- and other firms -- need to play in coming years to be successful in China.

Q: Just how much growth potential do IT companies in China expect?

I certainly think that China is considered to be one of the highest-growth areas for the IT industry. If you look at research from [research firm] IDC, in 2004 the overall spending for IT is about $30 billion. But if you look into the next few years, the projected growth, the [Compound Annual Growth Rate] is usually double digit. I think for the next few years, it's going to be 15 percent overall, with $44 billion to $60 billion in 2007.

So you really are seeing tremendous growth in the IT industry. But if you look into the details, then I would say that services is going to be the leading factor in the IT industry, while the hardware and software will be growing relatively slower compared with the professional services -- outsourcing and infrastructure services.

Q: Why services and not hardware or software? Is the infrastructure already there?

You've probably seen the tremendous growth of IT investment in hardware and software in China. While they are building up the infrastructure, they have a need for the systems to support the process requirements to support the business requirements. But throughout the years, they've bought the hardware and software. They now begin to realize the importance of matching the goals of the business and the IT and there's where you see the services becoming more important and leveraging the existing investment. Bettering its uses to get a better return is a big priority in China right now.

Q: Enter Unisys, I presume?

Yes, that's why I feel very confident that Unisys is able to play a major role in the IT services business in China in the next few years.

Q: There are other services providers in China like IBM and EDS. What does Unisys provide that the others don't?

Well, China's a big market; there's room for everyone to play. The important strategy is to put in the right focus to be able to concentrate on the right markets, and I think Unisys certainly has strong footing in services -- coupled with our company's enabling technologies -- that we can really expend in China.

Unisys has been in China for more than 20 years, and was one of the earliest IT technology companies from the U.S. to operate in China. IBM, HP and the others -- they all have operated in China for years, too.

Q: Unisys ties to Microsoft, and use of its Windows technology is well-known, yet many Chinese organizations are settling with Linux.

Linux is certainly an important initiative that China is moving towards. We also see some associations and vendors moving to a Linux environment. I've also seen Microsoft operating in China for many years -- I would say the most respectable software provider -- and I do feel that Unisys is taking the right approach of teaming up with Microsoft globally.

But we are also very focused on our technology based on Linux. We have our ES7000 server, which can also run on Linux, and we are really there to support the growth of both technologies.

Q: What do western companies need to do to succeed in China?

If you look at the business development, I feel [companies] will have to put in the commitment to really make it work. First is the opening of the market; most of the multinational companies -- whether it's from the U.S., Europe, Japanese or other Asian-based agencies -- are now operating in China. They are heavily invested there. No company can ignore China; whether you operate in China or not, you need to have a China strategy.

It's also important to support the Chinese enterprises, which are also moving outside China, who are looking at business and growth and looking for ways of transforming themselves into world-class companies. I mentioned before there was a lot of investment in hardware and software. Now is the time for them to leverage their existing investment in order to focus on services. They are the ones I see that have tremendous opportunities for Unisys to support -- the Chinese company who wants to compete with the agencies who compete inside China or are moving outside China -- and this is really the focus.