CHINA INFORMATION TECHNOLOGY LAW NEWSLETTER
Vol. 3, No.13 - October 7, 2002
TOPICS THIS ISSUE:
- Yahoo Avoids Being Blocked By Agreeing To Censor Site
- Shanghai Needs 10 More IC Production Lines
- Tom.Com Is Setting Up A Joint Venture In Mainland China
- China Software Growth Forecast
- China's E-Government Framework
- Technology Is Still And Shall Continue To Be The Leading Driving Force
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Yahoo Avoids Being Blocked By Agreeing To Censor Site
Internet portal Yahoo has avoided being blocked in China by voluntarily agreeing to purge its Chinese Web site of subjects considered taboo by the Chinese government. The agreement Yahoo signed is called as the Public Pledge on Self-Discipline for the Chinese Internet Industry. The agreement requires Yahoo to remove sensitive material about dissident groups and human rights organizations.
"Yahoo China, along with close to 140 media outlets in China, has signed voluntary trade industry guidelines which govern the Internet space in China." Yahoo is believed to be the only American company to have signed the agreement with Chinese authorities.
Internet companies operating inside and outside China must perform a delicate balancing act. Allowing too much information can get a Web site blocked by Chinese authorities, while limiting access raises the hackles of Internet freedom groups and human rights organizations.
Michael Gerlach, a professor at UC Berkeley specializing in international business, particularly in Asia, said that it is not easy to have a globalizing medium, and government can always keep some control over medium.
Yahoo's Web site carries no critical mention of the Chinese Communist Party and does not offer working links to information about banned religious groups such as Falun Gong.
Yahoo operates its Chinese Web site in a joint venture with Founder, a Chinese software firm. The Web site, based in Beijing and Shanghai, was launched in 1999.
A Yahoo spokesman, who did not want to be identified, said there was nothing controversial about his company's dealings with Chinese authorities. He said the agreement that his company signed in May regarding online content simply reiterated laws that Yahoo already had to follow. "Yahoo is committed to adhering to all local laws and customs in the 23 countries where we conduct business." A spokeswoman, Cindy McCaffrey, said: "We do adhere to laws of the country we operate in." China is not the only country that limits online content. For example, Google has removed a handful of links from its German Web site to neo-Nazi material, in accordance with German law. In the United States, Google has removed links to parts of an anti-Scientology Web site. The Church of Scientology had claimed Google was violating the law by directing Internet users to material the church had copyrighted.
(Source: The San Francisco Chronicle)
Shanghai Needs 10 More IC Production Lines
At the September 17's forum held during the 1st Pudong Innovation and Incubation Week, Zou Shichang, chairman of the IC Industry Association revealed that the total market demand for integrated circuits (IC) in China will allow Shanghai to establish 10 more IC production lines. In the next five years, the growth rate of the IC sector for the whole country is expected to be about 30 percent year-on-year, while the nationwide market size is expected to more than double.
According to Zou's estimation, the total revenue of the IC sector will add up to 330 billion yuan (US$39.76 billion). In comparison, China's IC sector turned out 120 billion yuan (US$14.46 billion) worth of IC boards in 2001, 60 percent of which are produced by IC manufacturers in Shanghai.
However, Zou also pointed out that at present, over 85 percent of nationwide revenue from the IC sector is generated by technologies owned by foreign investors. "Lack of key technology and intellectual property rights is currently the bottleneck for developing our own IC sector in the city" said Zou Shichang.
He added that a majority of the local IC manufacturers only package and assemble the imported components and devices, with profits depending heavily on the current low labour cost and Shanghai IC companies do not have much core competitiveness.
The association is urging the municipality to encourage more local firms to develop self-owned intellectual property rights.
(Source: USITO)
Tom.Com Is Setting Up A Joint Venture In Mainland China
Tom.com Ltd, a Hong Kong's Internet portal company controlled by tycoon Li Ka-shing, recently revealed that it had signed a letter of intent with Chinese mainland's Popular Computer Week Publishing House and China Science Media to set up a joint venture in China.
According to the letter of intent, TOM.com will contribute 312 million yuan (US$37.6 million) for a 49 percent stake in the project, with the remaining 51 percent stake to be contributed by the other two parties, which will inject the advertising and distribution operations of their publications into the joint venture. The venture will operate the local and overseas distribution and advertising business of the publications from Popular Computer Week and China Science Media, including Popular Computer Week, Popular Computer Week CD-ROMs, Popular Computer Week Bound Volume and other IT-related reference books.
In 2001, revenue and pretax profit from these publications amounted to about 142.7 million yuan (US$17.2 million) and 38 million yuan (US$4.6 million) respectively. The joint venture will last at least 20 years.
(Source: Xinhua News Agency)
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China Software Growth Forecast
Dion Wiggins, the research director with Gartner's Aisa-Pacific operations, predicted that China's software exports will catch up with India's in four years with help from India software companies.
Dion Wiggins said the exports of software and application development services in China will grow from last year's US$850 million to US$27 billion in 2006, with an average annual growth rate of 620 per cent. During the same time, Indian software and service sector exports will also jump from US$6.2 billion to US$27.5 billion.
The explosive growth of China's software and IT service exports will be inseparable from the Indian software businesses, Wiggins said. He predicted that Indian-related companies in China will contribute to 40 per cent of the total of China's exports in the software and IT service industry, or US$108 billion in 2006. Wiggins said the entry of Indian software vendors will bring their technology and management expertise to China, helping upgrade the level of China's software industry.
Due to their lack of project management, low-technology level and small employee group, Chinese software firms have difficulties in winning big software projects from foreign organizations. Although China has more than 6,000 software companies, double that of India, they only exported US$850 million in 2001, compared with US$6.2 billion of their Indian counterparts.
More and more Indian companies have realized the importance of the Chinese market and have decided to settle down here. Girija Pande, the president of Asia Pacific operations of India-based Tata Consultancy Services (TCS), said his company will use its Hangzhou-based research centre for global operations. "A lot of Japanese outsourcing orders are from big companies and we hope to win some of them with our Chinese base, which is close to Japan both geographically and culturally," Pande added. TCS, Asia's biggest software and service provider and the first Indian software firm to set up a Chinese subsidiary, will expand from 50 engineers in Hangzhou to 250 by next year.
(Source: USITO)
China's E-Government Framework
According to Yang Xueshan, director general of the Department of Policy Planning of the State Council Information Office (SCITO), E-government has been designated as a top priority for information in China.
Mr. Yang said that State Council has developed a broad framework for promoting e-government as follows:
First, China will build two unified e-government platforms -- one Intranet linking all government offices above a sub-provincial level, and an Extranet linking the public, enterprises and the government. The extranet will be linked to the Internet.
Second, China will build and promote 12 key projects, including an office resource system and a macro policy management system to support government decision-making; a Golden Tax project for online taxation administration; a Golden Customs project for online customs clearance; a Golden Finance project to digitize state budget making and execution; a financial oversight project to supervise the banking, trust, securities and insurance sectors; a Golden Audit project; a Golden Shield and social security project to ensure social stability and security; a Golden Quality project to crack down on counterfeiting; a Golden Water project to fight droughts and floods; and a Golden Farm project to serve agriculture.
Third, China will build two information systems and four databanks on population, legal entities, information resources and space geography, and macroecnomy.
Fourth, China would follow the model of outsourcing and trusteeship, proceeding from needs and making full use of existing routes and network resources.
(Source: USITO)
Technology Is Still And Shall Continue To Be The Leading Driving Force
On September 25, a group of analysts said at the Forbes Global CEO Conference in Hong Kong: despite the dotcom crash, technology is still, and shall continue to be, the leading driving force of the future global economy.
After dotcom crash, the technology sector is rebounding, and smart investors never had any doubts about this. Technology, particularly information technology, has driven the success of the global economy over the last 15 years, and shall continue to drive the success of the future economy.
According to George Gilder, the chairman of the US-based Gilder Publishing, the global telecommunications industry has witnessed a rise of 9,000 fold in Internet traffic, with a traffic growth rate of 10 percent in the past seven years. The world communications infrastructure was completely transformed, and a trillion dollar telecom revenue was created over the past seven years. "With the continuing growth of telecommunications traffic, dominated by voice traffic, video traffic and video teleconferencing, the coming 10 year from now shall see another tremendous creation, at least, 100 fold of that kind of wealth creation we have seen in the past, Gilder added.
Gilder said "the New Economy was real and is going to manifest itself in the future. The concept of internet is also real." The great potential of new technologies in the future global economy can not be imagined.
( Source: Xinhua News Agency)
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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