TOKYO, Oct 22: Top electronics firm Hitachi Ltd. and rival Toshiba Corp. said on Monday they will team up with other Japanese and Chinese firms to develop software in China where labour costs are much lower than at home.

It is cheaper to operate in China but we plan to import the software to Japan afterwards, that is the main target, said Hitachi spokesman Atsushi Kanno.

The two technology leaders will club together with systems integrator Otsuka Corp. and Tokyo-based software developer Original Soft Co. to launch a 50-50 joint venture in Shanghai with major Chinese software house Top Group.

We are still awaiting final approval from the Chinese government but we plan to open the firm on October 31, Halloween, Kanno said.

Shanghai Sakura Information Systems, capitalised at $4.95 million will sell software to firms in Japan and also China, targetting annual revenue of two billion yen.

It is much cheaper to develop software in China if you consider the labour costs and, also, the level of technology expertise there is very high, said Toshiba spokeswoman Midori Suzuki.

We also plan to open an academy to train technology students in Shanghai, she said.

More and more technology firms in Japan are opening offices in China and shifting production over there in a bid to cut costs amid a global hi-tech slump, said Hitachi’s Kanno.

The group will own 50 percent of the venture, with Hitachi and Otsuka taking a 22 per cent stake each, Original Soft 4.5 per cent and Toshiba the remaining 1.5 per cent.

The cost of hiring Chinese systems engineers are about one-third to half of their Japanese counterparts, making it about 30 per cent to 40 per cent cheaper to develop software in China than in Japan, the Nihon Keizai newspaper reported, quoting sources close to the venture.

The four Japanese technology firms have already established Nichu Techno Park, a similar joint venture in Tokyo, 44 per cent-owned by Hitachi and Otsuka, with Original Soft taking nine per cent and Toshiba three per cent.

We felt the company had good merits for our business, said Hitachi’s Kanno. —AFP