(This photo is downloaded from World Eco-

nomic Forum website)

During January 26-30 2011, the World Economic Forum Annual Meeting 2011, also known as "Davos", was held in Davos-Klosters, Switzerland. Over 2,500 leaders from business, government and civil society participated in the five-day meeting and exchanged their ideas to the theme of "Shared Norms for the New Reality". Dr. Liu Jiren, Chairman & CEO of Neusoft Corporation, attended the meet-ing and also shared his thoughts with other participants as a discussion leader in the session titled “Insights on China”.

Here is an interview with Dr. Liu about his insights on the challenges for global growth companies in the new global economy. Q: This year the theme of the Annual Meeting is “Shared Norms for the New Reality”. Would you please share with us how do you under-stand the theme? A: As we can see, the global economic center of gravity has been shifting since the financial crisis and the global eco-nomic pattern are undergoing profound transformation. Emerging economies are rising as major driving forces of the new global economy. Imbalance and unsus-tainability in the global economy were unveiled by the crisis, on the other hand, changes and conflicts have been arising from the fast transformation while emerging countries are further integrat-ing into the global community, which gives rise to an unprecedentedly complex and highly interconnected economic envi-ronment. The world is changing fast, and we need to set up new rules and coop-eration systems to enable better collabo-ration between the developed countries and emerging countries with improved competitiveness under the new economic order. Q: How do you see the impact from the global new reality to software and service industry? A: The globalization of world’s manufac-turing industry and the integration of

markets have accelerated the globaliza-tion of innovation. Reverse innovation has also become a new trend. The proc-ess of globalization has great impact on every industry. Therefore, any country, enterprise or individual has to face and adapt to the new rules under the new global economy. This poses great chal-lenges for fast-growing emerging multi-national companies. Even for those ex-perienced and mature MNCs, the new reality also means the beginning of a new story. Software and service industry is no excep-tion. Software, which is closely associated with manufacturing and innovation, has been widely used in various industries and diversified products. MNCs are accel-erating their steps to build up innovation network in emerging markets, while emerging companies begin to set up R&D centers in developed markets, which leads to increasingly deeper global inte-gration. Under such background, I think China and India will become major forces in the global software and service indus-try. Q: You have talked about innovation in China in the session titled “Insights on China”, so would you please share with us why innovation is very im-portant to China and how do you

Neusoft CEO Attended the 2011 Winter Davos and Highlighted the Challenges for Global Growth Companies in the New Global Economy

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think of the growth potential of inno-vation capacity of China? A: I think China is now rising as an emerging power in the global innovation network. Although China has maintained a high-speed growth over the past three decades, its innovation environment and incentive mechanisms were not sound enough. But as China’s economy is un-dergoing restructuring and transforma-tion, innovation is becoming a significant driving force to the future growth. The past low-cost and resource-consuming economic development model has already become an obstacle to sustainable devel-opment and a harmonious society. Low-cost model means low income of people. But now, China is stimulating domestic consumption, which requires increasing people’s income, however, it will lead to an increase in labor cost and make us lose our traditional competitiveness that has been accumulated based on low-cost model in the past. This is why China must

build up innovation capability to gain new competitiveness and explore new growth space. In the future, China must stick to an inno-vation-driven path to manufacture more high value-added products, transform to a knowledge-centric economy and build more internationally respected brands. Its abundant high-quality human resources and huge market potential are the strong advantages for China to build innovation competitiveness. Q: In you opinion, how should Chi-nese enterprises look on the relation-ship between international market and China’s market? As an emerging multinational company, how does Neusoft cope with the international market and China’s market? A: Along with the deeper integration of the global markets, how to achieve a good balance between international mar-

ket and home market has already become a big challenge for many Chinese enter-prises. China has already become a highly important target market for MNCs all over the world, thus Chinese companies have to face the fierce competition from MNCs in the home market, which forces them to build up strong multinational operation capacities to survive. Currently, for Neusoft, we have 30% of business revenues come from overseas markets and 70% from China’s market, and we will change this percentage ratio to a roughly fifty to fifty basis in the fu-ture. Neusoft will be engaged in becom-ing a globally leading IT solution and ser-vice provider. In order to achieve this goal, we must continue to maintain a leading position in China’s market, while establishing unique and effective growth pattern in international markets, thus to further improve our global competitive-ness.

Issue 2 2011

SHENYANG, China – According to the newly-launched Global 100 Software Leaders report, Neusoft Corporation (“Neusoft”, 600718.SH), a leading IT solution and service provider in China, is ranked among the Global Top 100 Soft-ware Vendors, and is the only software company from China included in the ranking. In addition, Neusoft also leads the ranking of the China Top 100 Soft-ware Vendors. Global 100 Software Leaders, a unique initiative between PwC and leading soft-ware industry associations, presents to-day's top 100 software companies around the world as well the Top 100 in the key countries of China, France, Ger-many, India, the UK and the US. This re-port not only provides a look at the

world’s leading software companies, but also offers a snapshot of the present state of the industry. The ranking is based on licence and maintenance and support revenue - as well as SaaS/ASP and open-source fees. When referring to China’s software industry, Alison Wong, a Tech-nology Leader from PwC China, com-mented that software enterprises have great growth potential in China, and the Chinese software market is expected to be dynamic and fast-changing in the years to come. “It is a great honor that Neusoft is recog-nized as one of the Global Top 100 Soft-ware Vendors and also ranked No.1 in the China Top 100 Software Vendors,” said Dr. Liu Jiren, Chairman & CEO of Neusoft Corporation, one of 23 software

company executives who received the interviews for this report. “China’s econ-omy is undergoing a profound transfor-mation from a manufacturing-centric to a knowledge-base economy, which brings enormous opportunities and great growth potential to China’s software industry. Chinese software providers have made great advancements over recent years, and they have gained good market share in the domestic market and are actively expanding into international mar-ketplaces. I believe that China will soon emerge as a major player in the global software industry."

Neusoft Included in Global Top 100 Software Vendors and Ranked No.1 in China Top 100 Software Vendors by PwC

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Issue 2 2011

DAVOS, Switzerland (Dow Jones) -- China's leading software company, Neusoft Corp. (600718.SH) aims to boost its international revenue to more than 50% of its total by 2015 from around 30% now, as the company expands its presence abroad via more investment and acquisitions in research and development, Neusoft's chairman and chief executive, Liu Jiren, told Dow Jones Newswires in a recent interview. "We are strengthening the buildup of our global research and development net-work as we continue to seek high-speed growth. Overseas investment and acquisi-tions are becoming a norm for us," Liu said in an interview Thursday on the side-lines of the World Economic Forum.

The Shanghai-listed firm invested in a healthcare-related research and develop-ment business in Israel earlier this year, following similar investments last year in automated car information systems, mo-bile network and healthcare in Germany, Finland and Romania, Liu said, without giving details. He said Neusoft will focus on Japan, the U.S. and Germany, its biggest markets and the world's strongest markets in re-lated businesses, in the coming years. "In a globalized world, we can't just rely on one market," he said. Neusoft also aims to maintain a high an-nual profit growth rate of 10%-20%, as it has in the past five years, in the next

decade, Liu said. Commenting on the company's business model, Liu said he doesn't want Neusoft to follow the footsteps of Indian software firms that drive growth via labor-intensive outsourcing. "Outsourcing now constitutes around 20% of our business with the other 80% from solution. We don't want to follow a labor-intensive model as labor costs in China are also rising," he said. (This article comes from Dow Jones News-wires)

DAVOS: Neusoft Corp Chairman Aims for More Revenue from Overseas

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