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In an effort to boost its presence in China's fast-growing smartphone market and strengthen its cloud computing and Internet search capabilities, Microsoft Corp., has announced plans to increase its research and development staff in China by around 10 percent this year.

Ya-Qin Zhang, chairman of Microsoft's (News - Alert) Asia-Pacific R&D Group, told the Wall Street Journal that the company will add between 300 and 400 R&D staff in mainland China, adding to the approximately 3,000 people already working there. Microsoft will also add 600-700 staff members in other parts of Asia, including Hong Kong, Australia and Korea. The company has a global research staff of 30,000.

"We will continue to work to improve Windows, our next generation of office products which is more cloud based, and search and advertising," said Zhang. "We will also invest heavily on consumer products such as our Windows phone, TV and gaming platforms."

Zhang added that Microsoft will spend around $500 million in Asia this year, and around $9 billion globally on R&D. He admitted the company has faced challenges in the mobile software space, mainly from Google's (News - Alert) Android and Apple's iOS operating platforms. The company is hoping its recent partnership with Nokia (News - Alert) Corp., will help the company gain more ground in Asia.

Nokia announced earlier this month that it would adopt Microsoft's Windows Phone as its primary smartphone platform in hopes of gaining ground in the smartphone space. Zhang would not comment on a planned Windows smartphone that Nokia Chief Stephen Elop said the company would launch later this year.

"We've made some mistakes and we really needed a distribution channel. We need their [Nokia's] multimedia capability and Nokia is also really good at reaching all different segments of the phone market. This is a perfect partnership," said Zhang. "We have a team working on the phones, but I can't comment on the specifics of the partner collaboration."

Zhang also said that software piracy and a lack of clear rules and regulations make China a challenging market for multinational corporations. "The Internet environment in China is changing very quickly. For multinational corporations, it takes more time to adapt to the policies in the country and decision making tends to be delayed," he said.