FiveDash, an open-source accounting software outfit, has hesitated to release a Chinese version of its program even though the company's coding base is in China, said Shannon Roy, CEO of the company.
The usual open-source business model of giving away software and then selling related services does not work as well in China, said Roy. Low-cost labor makes it cheaper for many smaller companies simply to keep their own technical support staff rather than paying for outside services, he said.
Low awareness and the absence of a major backer among Chinese IT companies mark China's open-source landscape as well, said James Bai, Sun Microsystems chief officer of the Open Community in China.
That contrasts with the U.S., where companies like IBM and Intel contribute broadly to open-source projects, said Bai.
China does have open-source vendors besides Red Flag Software, including Linux distributor China Standard Software Company (CS2C) and RedFlag2000 Software, maker of an office suite called Red Office. But those companies have not inspired the growth of open-source communities and are not seen as innovative.
Red Office is based on OpenOffice. Some have speculated that Red Flag copies from Red Hat's Linux distribution, given similar boot-up processes and release cycles, said Cheung, the analyst.
"Certainly we can't find concrete evidence to prove that, but it seems to us in the market that they are not leading the open-source initiative," Cheung said.
Linux server software took about 3 percent of China's market for server operating systems last year, said Cheung. But that number is by revenue, and the low cost of Linux means the proportion of servers that shipped with the operating system was likely higher. Linux took an even smaller portion of the revenue in China's market for client operating systems with about 0.5 percent.
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