US software giant Microsoft on Friday announced it will invest 25 million US dollars in China's IT company Langchao Group to develop advanced management software for Chinese firms.

Microsoft's investment will be mainly used to help Langchao improve ERP, e-government software, and software outsourcing, according to the agreement signed by the two companies.

It is the first core business cooperation between the two sides since November 2004 when Microsoft forged a strategic partnership with the Jinan-based Langchao Group in east China's Shandong Province.

Last year, Langchao led China's ERP business, with 50 percent growth over the year earlier.

Its ERP customers include 38 percent of the enterprises under the Commission of State Assets Management, 20 percent of domestic listed companies, and 35 percent of the securities firms, according to sources with Langchao.

"This strategic investment is part of our commitment made in the Memorandum of Understanding signed with the National Development and Reform Commission to support China's software industry," said Tim Chen,Corporate Vice President and CEO of Microsoft Greater China region.

"We hope that this investment and the strategic partnership will help Langchao, one of the leading IT service providers in China, to grow and play an increasingly important role in the IT service market. It reaffirms our partnership strategy, which is vital to our success in China, as we rely on the success of our partners to achieve our success," he said.

Market observers said the combination of Langchao's leading role in the domestic management software market and Microsoft's advanced NET operating platform are likely to have an unprecedented impact on China's information industry.

Langchao Group has two sub-companies, Langchao Information and Langchao Software, listed in the mainland stock markets and Langchao Electronics listed in Hong?Kong.

The Group has R&D centers in the United?States and Japan, and teams up with international IT big shots like LG, NEC, and IBM.