Archive for the ‘China’ Category

The Google Dilemma and the China Syndrome

Monday, May 3rd, 2010
Posters courtesy, IISH, and Stefan R. Landsberger Collections

Google was the first, but it probably will not be the last.

New rules went into effect in China on May 1 that require foreign vendors of information technology devices to disclose proprietary information if they want to sell their products to the Chinese government.

Now Cisco, Symantec, and Microsoft will need to make the same difficult choice as Google did — to continue participating in and benefiting from the miraculous economic growth of the Chinese economy, or to protect their intellectual property from theft and their customers from cyber espionage by hackers based in China.

Under the regulations, vendors of secure network routers, smart cards, anti-spam software, firewall software and other products involved in protecting digital data must meet new technology standards before being certified for sale to government agencies. However, the certification testing will be performed by government-connected testing laboratories, and as part of the testing, the vendors must disclose encryption algorithms, software source code, and design specifications that, for many of the products, are regarded as sensitive trade secrets.

The Chinese government argues that the certification and testing process is necessary in order to protect the Chinese government from viruses and hackers. Officials have also previously justified the new rules on the grounds that they would assist the fledgling Chinese digital security industry. According to one Chinese official, foreign firms currently control 70% of that market in China. Chinese officials have also argued that other nations have similar disclosure and certification programs for digital security products.

But the companies and their home governments argue that disclosure of their proprietary algorithms and source code to the Chinese government, which is also trying to promote its domestic digital security industry, amounts to an unfair trade policy. A further concern (although not officially acknowledged) appears to be that possession of such information would permit Chinese government-connected hackers to gain a “pass key” to the networks of political dissidents and economic competitors. And the knowledge that the Chinese government has such a pass key would dampen purchases by other foreign governments.

The dilemma now faced by foreign digital security vendors echoes that faced by Google, which was forced to choose between access to a market of 380 million computer users, or exposing both its intellectual property and its users to cyber espionage. Google’s decision to move its offices from Beijing to Hong Kong also not coincidentally removed direct competition for Google’s domestic Chinese search engine competitor, Baidu.

The Chinese government has significantly scaled back the certification program since it was first announced. According to an article that ran in the Japanese newspaper Yomiuri Shimbun in September, 2008, the original certification program would have required disclosure of proprietary code even for consumer goods such as flat-panel televisions, and for sales to the Chinese retail market as well as to the government. Those rules were set to go into effect in May, 2009, but after vigorous protests from foreign governments, the effective date was postponed for one year, and the scope was narrowed to only goods procured by the Chinese government.

Similarly, the Chinese government has recently deleted the most controversial provisions of another program that would have required the Chinese government to give preference to Chinese companies for purchases of all information technology products.

モノ作りと知恵作りとライセング, Part2

Sunday, February 28th, 2010

Making Things, Making Knowledge, and Licensing, Part 2>> English translation








「金融危機の影響がもっとも大きく出た日本。GDPはまもなく中国に抜かれ3位に転落するのは必至である。こうした中、日本はグローバル経済の中で、何を作り、何で稼いでいくべきなのか。世界最強のブランドと言われた“メイド・イン・ジャパン”が、出口を求めて必死にもがいている。いま日本の製造業が直面している世界の地殻変動、それは、猛スピードで技術が陳腐化し、製品の差別化が難しく、しかも製品の寿命が超短命に陥っていることだ。メイド・イン・ジャパ ンの代名詞だったテレビ業界では、特にその傾向は顕著で、どんなに高度で精密な薄型テレビを作り出しても瞬く間に韓国台湾などアジア勢の猛追を受ける。少しでも安いモノをと考える消費者にとって、ライバルがある程度の技術力を持てば、日本製品の優位性は一気に崩れるのだ。こうした中、いま一度日本国内工場 の存在意義を問う、「生き残りをかけた実験」が始まっている。東芝ではコストを度外視した超高機能テレビを作り技術力を極めようとする試みが佳境を迎えた。JVCケンウッドでは、自社生産にこだわらず、技術を中国メーカーに譲って製品を作らせ、そのライセンス料を企業収入にしていこうという動きも見られる。番組は、「日本は今後どうやって食べていくのか」、「日本人は何が得意なのか」と自問を繰り返す二つの電機メーカーの社運を賭けたプロジェクトに密着 し、メイド・イン・ジャパンの未来を見つめていく。」



番組によると、JVCケンウッドは、モノを作るだけでなく、魅力的なシステムをあみ出す知恵にこそ日本の活路があると思い至ったのです。堺屋氏はその考え方に賛同すると思います。 (more…)

Google vs. China: Heavyweight, Middle Class Bout of the Century

Wednesday, January 20th, 2010

Ready, Aim, Firewall!

Whether it is a political race, a business battle, or a heavyweight boxing match, every great fight should feature a match of skilled, powerful, opponents, but also an interesting back story.

The Google vs. China contest features both in abundance.

In this corner, we have China, a nation of 1.3 billion people, with 384 million Internet users and a 10% economic growth rate (“only” 8.7% during 2009, when most other economies shrank), which has already become the “world’s factory,” and is looking to move up the economic value added chain through a combination of hard work and cyberespionage. It is the champion of closed source, closed systems, and top-down economic growth.

In this corner, we have Google, the world’s most innovative, most profitable, new economy company, which has brought libraries worth of free knowledge and information to the doorstep of the poorest villager in the poorest country in the world, as long as he has an Internet connection. It is the champion of open source, open systems, and bottom-up economic growth through the power of networking.

The elements of the back story in this battle—intellectual property, economic growth, scientific progress, and individual freedom—are the issues that get us excited here at The Licensing Law Blog. And the winner of this contest just may determine the course of the early 21st Century. (more…)