The rapid advance of networking and componentization technology is one of the most important characteristics in software development in recent years. Represented by such key technologies as Distributed Component Object Model, Common Object Request Broker Architecture, JAVA, and the World Wide Web, the new operating and development environment enable application software to meet the demands of the information society with fundamental changes in system designs and technical structure. This paper explores the strategies for the Chinese GIS software industry to take advantage of the current technical environment so as to make use of its strength and to develop strategies to overcome harriers. Based on the dynamic and hierarchical characteristics of the technical structure of the software industry, the paper analyzes the software development trend. It indicates that the main breakthrough in software technology in recent years is in software cooperation and componentization. Correspondingly, the center for software development in GIS is gradually shifting to server functions and component banks, as well as to a series of linkage components. With support for software component development gradually mature, China should he able to compete strongly in the GTS market with components for spatial data collection and editing where existing Chinese products out-perform foreign counterparts. The Chinese GIS software industry should also consolidate resources to tackle the key technologies in the next generation of GIS software, namely high performance functional and component server, efficient connections with Database Management Systems and the World Wide Web, and robust and interoperatable GIS Brokers.