According to a news item appearing the Economic Times (7th Sept. 2011) Indian IT major Infosys gave up its plans for increasing foreign direct investment (FDI) in China as its major customers in Europe and the USA had apprehessions about their data procession and/or software-related work being done in China owing to fears about the protection of intellectual property rights.

The report cites as source a US diplomatic cable which has been released by WikiLeaks. It also narrates an incidence, which N.R. Narayana Murthy, Co-founder of Infosys reportedly told US diplomats:

Murthy said he understood the misgivings of his clients and narrated his experience in China to show how rampant piracy was. Stepping out of his central Beijing hotel to go for a stroll with Peter Bonfield, then CEO of British Telecom, they encountered a sidewalk vendor selling pirated Microsoft and Windows products.

Bonfield jokingly asked the vendor if he had Finacle (an Infosys banking software product) and the vendor replied: „I can get it for you tomorrow.“

Murthy, was at the same time quite clear about China’s potential, its qualities, and HR problems that it faces, as is clear from the next section:

Murthy, however, was optimistic about the long-term potential of China. As per the cable, he stated: „There is nobody better than the Chinese at solving a problem once they are serious about it.“ Murthy said it would take four to five years for the Chinese to overcome that reluctance.

There were other concerns for Infosys to expand in China. Murthy told the diplomats that though qualified graduates were available, those with sufficient English skills commanded a high premium. He said retention was more difficult in China than in India, as Chinese professionals are more willing to leave for a higher salary where Indian ones value institutions a bit more.

The whole report is available at: The Economic Times (11.09.2011)