(Comtex Business Via Thomson Dialog NewsEdge) SHENZHEN, Jun 27, 2006 (SinoCast China IT Watch via COMTEX) --US IT giant EMC Corp on June 24 announced that it plans to invest USD 500 million in China within five years to better tap into the local market.

EMC, the world's largest provider of data storage and information management solutions, competing with companies such as Hewlett-Packard, IBM and Hitachi, entered the China market 10 years ago by setting up an office in Beijing.

Between 2001 and 2005, EMC invested about USD 150 million in the country, according to chairman and chief executive officer Joseph Tucci.

"A large portion of the USD 500 million investment will be spent on research and development (research and development) activities in China," he said.

The aggressive investment plan confirms a trend that major global technology firms are increasingly transferring research and development activities to China.

As part of the new investment plan, EMC will launch an research and development centre in Shanghai next month, the first of its kind in China. Previously, EMC partnered with leading Chinese software maker Neusoft in research and development activities.

The new centre will recruit about 100 research and development engineers and plans to expand the workforce to 500 by 2008. "A primary focus of the Shanghai research and development centre is to provide software solutions for the global market, as well as localization of offerings for the Chinese market," Tucci said.

And EMC will "open other centres in China over time." EMC, one of the top 10 IT companies in the world, earlier this week also announced it would invest USD 500 million in India by 2010.

Globally, EMC already has more than 20 research and development facilities, with four in India. The Shanghai research and development centre will be one of the largest, together with similar facilities in the United States and India, said Charles Fan, vice-president of EMC and general manager of the China research and development centre.

Cashing in on China's huge talent pool is expected to help EMC boost its sales in China's dynamic IT market. According to data tracking firm IDC, EMC accounted for 39 per cent of China's storage software market in terms of revenue.

Tucci said EMC's annual sales in China last year had grown by 45 times compared to 10 years ago, although he declined to give details. Yet, so far, China is believed to have contributed only a small portion to EMC's global revenue.

The Asia-Pacific region last year contributed 11 per cent to EMC's global revenue of USD 9.7 billion. Tucci said China's IT market is growing "substantially faster" than other parts of the world, which is generating increasing demands for information storage and management.

According to Beijing-based research house Analysys International, the storage equipment market in China in the fourth quarter of last year was worth CNY 1.99 billion, increasing 16.4 per cent year-on-year.

Demand for storage solutions is forecast to surge in the coming years as Chinese telecom operators build next generation networks. The country's financial sector will also be opened wider next year, Analysys said.