CHINA INFORMATION TECHNOLOGY LAW NEWSLETTER
Vol. 3, No.11 - September 6, 2002
TOPICS THIS ISSUE:
- China Telecom to Go for Overseas Listing in October
- China Software Industry to Reach RMB 250 Billion by 2005
- "Internet addiction" harming China's young, psychologists warn
- Group: Yahoo! Probe Risks Complicity
- Copyright Law Implementation Regulation Issued by China's State Council
- SARFT Issues Rules on Digital Movies
China Litigation and Arbitration
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China Telecom to Go for Overseas Listing in October
On August 5 2002, China Telecom announced that it will proceed with its overseas listings in October 2002. The Shanghai, Zhejiang, Jiangsu and Guangdong branches will make up the main body of this, the first, overseas listing for China Telecom.
The October listing will take place, simultaneously, in New York and Hong Kong. It is estimated that China Telecom's initial public offering (IPO) will attract an estimated US$2.5 - US$3 billion. However, neither China telecom nor its underwriters Morgan Stanley Dean Witter, Merill Lynch and the China International Capital Corporation, have revealed specific details.
China Telecom have rebuffed claims that it is a bad time to go public. They have maintained that there should be no problems as capital demand is not the priority target, "for China Telecom, the listing is more strategically orientated rather than financially driven as is usually expected."
After years of capital accumulation, China Telecom has constructed a fixed-line telecom network using the most up-to-date equipment. As a result, the company does not need urgent funding for any pending large-scale projects, unlike China Unicom which needs a lot of capital to upgrade its code-division multiple access (CDMA) network.
According to Johnathan Zhu, managing director and head of Morgan Stanley's telecom team, "China Telecom's listing is more strategy-driven rather than the pure pursuit of money." He cited the reported significant improvements in management and the eventual transparency that the listing on the New York and Hong Kong stock exchanges will attract many investors. Industry insiders have added that another major purpose of China Telecom's listing is to protect itself with the umbrella of overseas investors against China's "inconsistent" telecom policies.
Many Telecom operators have complained that the regulator is not "consistent and equal" in it's treatment of firms. China does not currently have a telecom law to ensure the equal treatment of all telecom operators. The Little Smart case publicly highlighted this.
Little Smart or PHS (personal handset system) is a wireless communications device that has been a major new revenue generator of the fixed-line carriers, as a result it has become widely developed in China. However, the regulator ordered the carriers to stop when it was introduced into the big cities, such as Beijing and Tianjin. Many claim that the regulator's actions were borne out of its belief that Little Smart would threaten the interests of the two listed mobile carriers. This case led to calls, from both Chinese and foreign telecom carriers, for a clear consistent and equal regulatory system to be implemented so as to maintain the telecom industry's development.
<Source: People Daily Online>
China Software Industry to Reach RMB 250 Billion by 2005
In a recent interview Chen Chong, President of the China Software Industry Association (CSIA), and deputy-director at the department of e-info product control in the Ministry of Information Technology, outlined China's plans for software development and growth.
Chen stressed that China has worked out a plan for strengthening its software industry before 2005 by adopting some practical measures. "The Chinese government made public its 'No.18 Document' in June 2001, this included "policies encouraging the development of software and integrated circuit industries". The majority of its content is centered on the domestic market with the main emphasis on the training of personnel and the development of software.
These efforts were in an attempt to realize an industry scale of RMB 250 billion in 2005 with its exportation to harvest US$2 billion and to produce more than a hundred brand names with 800,000 people engaged in the work of development.
Chen stated that in the software business exchanges between China and Japan, the Chinese side is in charge of the low-grade work of program designing and single-unit testing for Japan. Chen was confident that in the future China could do some work in the development of a main system, which could be used by large enterprises of the two countries. China, Chen believed, is capable of engaging in the development of a product that would have a higher value and use. Chen went on to say, that it would be a positive development if China and Japan were to use a system of common configuration especially now in an era of economic globalization.
Chen later noted that the software industry had seen a rapid development in Dalian. In the field of development of Japanese software it is well ahead of others in the country. As a national organization, the CSIA hopes that the Dalian pattern can be promoted to all over the country with Shanghai and Beijing, taking a cue from this lead.
When asked who was the partner of greater importance, USA or Japan, Chen replied that according to the present situation though Beijing and Shanghai are not intentionally tending to the USA yet, its quite natural for enterprises to cast their eyes on the USA. It is also easier to have a deeper relationship with the enterprises in Europe and the USA since many business orders are coming that way.
However, the software enterprises in Dalian, which has strong ties with Japan, has recently witnessed a lot of development whereas the software industry in Beijing and Shanghai have been affected by the slowdown of the US economy through a downturn of business orders from the USA. In an attempt to look for business, they start to set their eyes on the Japanese enterprises.
The USA's strong point is in its development of operational systems and intermediary parts. Its main weak point lies in its software for business applications. For example, IBM is in charge of certain e-government projects in Beijing. In the beginning it was deemed that all the work was to be carried out solely by IBM. However, later almost all the work for applications software was undertaken by software enterprises in Beijing. Japan has, for a long time, been good at the development of applications software for systems of large-banking corporations as a result, Chen noted, it's better to have a combination of the strong points from both sides.
<Source: People Daily>
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"Internet addiction" harming China's young, psychologists warn
Concerns about "internet addiction" were expressed at a seminar that closed Wednesday 7 August 2002 in Zuhai, Guangdong province. Experts from Hong Kong, Taiwan and mainland China cited psychologists' fears about the level of "internet addiction" among China's Youth.
Prolonged contact with the Internet can cause the psychological disease "Internet addiction disorder". As many as 300 million people, globally, are believed to suffer from "Internet addiction disorder".
"Internet addiction" causes an " intimacy between a person and a computer and indifference to other people," said Zhu Zhenting from Guangdong University of Foreign Languages and Foreign Trade, "it has a bad influence on human health and the sufferer's sense of responsibility. People affected can become anxious and frustrated."
Chinese academics and psychologists have cited in studies that the occurrence of the disease in China will increase due to the rapid spread of the Internet and the fast rise of the number of Internet users in China. The seminar noted one extreme case, in Nanchang, Jiangxi Province, of a 17 year old middle school student that died suddenly from over excitement when playing games in an internet cafe.
"People with high anxiety levels can easily become addicted to the Internet," said Professor Lin Yi-cheng from Taiwan University.
China has an estimated 45.8 million Internet users, according to figures released in July by the China Internet Network Information Centre, making it third only to the USA and Japan. This figure was a 72.8 per cent increase on 2001.
Experts, however, said that the disease can be cured by adjusting computer usage, through psychological consultation and by effective websites on the Internet. Psychological consultation websites were set up in the United States in the late 1990s, and some cured Internet addicts became volunteers to help others.
<Source: BBC Worldwide Monitoring>
Group: Yahoo! Probe Risks Complicity
"It will switch from being an information gateway to an information gatekeeper," was the remark leveled at Yahoo! from, New York based, Human Rights Watch. They claim that Yahoo!'s voluntary signing of a Chinese government pledge concerning Internet privacy goes against what they stand for and against basic human rights.
'The Public Pledge on Self-discipline for China Internet Industry' was launched in March 2002, since then it has attracted more than 300 signatures, according to its organizers, the Internet Society of China.
The pledge identifies its main aims as the promotion of Internet use, prevention of online crime, the fostering of healthy industry competition, and the avoidance of intellectual property violations. Other clauses, though, speak of China's tight control over information and the government's extreme sensitivity to criticism or political challenges.
Those who sign the pledge must refrain from "producing, posting or disseminating pernicious information that may jeopardize state security and disrupt social stability." The prohibition also covers information that breaks laws and spreads "superstition and obscenity." Members must remove material deemed offensive or face expulsion from the group.
Signatories also pledge to monitor content of foreign-based Web sites and block those containing unspecified harmful information. Human Rights Watch has taken issue with Yahoo! for signing the pledge.
Yahoo!'s Beijing office confirmed last month that it had signed the pledge. Human Rights Watch, in a letter to Yahoo! CEO Terry Semel, said the Chinese government's restriction of the Internet should not be aided by a company committed to free online expression.
Kenneth Roth, Human Rights Watch's executive director, claimed that "if it implements the pledge, Yahoo! will become an agent of Chinese law enforcement." Yahoo! has not yet replied to the letter, which expressed "deep concern" and asked for a meeting to discuss free expression issues in China.
<Source: Associated press Online>
Copyright Law Implementation Regulation Issued by China's State Council
The Implementation Regulation concerning the Copyright Law was issued by the State Council. The regulation was made on the basis of the Copyright Law passed in October 2001.
The regulation consists of 38 articles. The regulation deals with the punishments for copyright infringement and clear explanations of the terms set out in the Copyright Law. The regulation provides the details and rules on how to enforce the copyright law and the regulation fulfilled the commitments made by the Chinese government to update the Copyright Law after China joined the World Trade Organization.
The regulation will come into effect on September 15, 2002.
<Source: USITO>
SARFT Issues Rules on Digital Movies
The shooting, distribution and projection of digital movies as well as the construction of digital cinemas were issued with two new sets of guidelines on August 7. The new regulations, from the State Administration of Radio, Film and Television (SARFT), have been brought in to promote digital films and cinemas.
SARFT is the government body in charge of developing plans and technical standards for digital movies and censoring digital movies. It is also responsible for issuing permits for shooting, distributing and projecting digital movies. The Provisional Rules on the Administration of Digital Movies applies to anyone that shoots, produces, censors, imports, exports, distributes or plays digital movies within the People's Republic of China.
The interim regulations from SARFT have stated seven key standards that must be met; Firstly GB/T 3557-94, which is a technical requirement for the audio and visual environment of cinemas. Secondly, GB/T 4645-94, which sets a standard for the screen brightness of indoor cinemas and appraisal of proposed projection rooms. Thirdly, GY/T XXXX-XXXX is the new technical standard for Digital Stereo cinemas.
Furthermore regulation, GY/T 155-2000 brings into line the video parameters for High-Definition television programming and exchange. Moreover regulation, GY/T 147-2000 states the new general technical requirements for Satellite Digital TV Reception Stations. The new regulation GB8898-2001 sets forth the safety requirements for audio, video and similar electronic devices. Lastly, regulation GB9254-1998 clearly shows the new Radio Disturbance limit value and method for measuring Radio Disturbance for Information Technology Devices.
The interim technical requirements for digital movies set out, clearly, the technical specifications for shooting, producing, storing, transmitting, distributing and projecting digital movies using digital technology and devices. It applies to rear-stage digital movie producers, as well as distributors and cinemas using digital projectors.
The regulations go on to specify technical requirements for any digital film production. This would include aspects such as images, sound and real-time transmission. It would also encapsulate distribution, projection and any storage and surroundings in the projection room.
<Source: USITO>
The China Information Technology Law Newsletter is intended to be used for news purposes only. It should not be taken as comprehensive legal advice, and Lehman, Lee & Xu will not be held responsible for any such reliance on its contents.
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