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HP, Microsoft eye China business

The duo will combine to target small- and medium-sized enterprises in the still-growing Asian country.

High-tech giants Hewlett-Packard (HWP) and Microsoft (MSFT) will combine in targeting small- and medium-sized enterprises in China, hoping to make inroads in the Asian country's still-booming computer market.

The two companies have signed an agreement to develop a "small enterprise strategy" that promotes computerization among businesses hindered by outdated technology and poor financial resources, according to the Xinhua News Agency. As an initial step, HP will step up work with local software developers to hammer out small-business-oriented software solutions.

Microsoft's role in the partnership was not immediately clear. It's uncertain if the two companies will develop cobranded systems.

Earlier this month, Microsoft opened a support center in Shanghai to advise its customers.

Currently, China has over 4 million small- and medium-sized firms, comprising 80 percent of all businesses in the country.

Its PC market remains one of the few bright spots in the Asia-Pacific region. While the Asian currency crisis has hampered growth in surrounding ASEAN nations and South Korea, 3 million PCs were sold in China, marking a 40 percent growth in 1997 from the previous year.

Both Microsoft and HP offices in Asia could not be reached for comment due to observance of the Chinese New Year.