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Foreign Companies Concerned Over Intellectual Property Theft in China

Epoch Times Staff Created: January 20, 2010 Last Updated: January 20, 2010
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A bouquet of flowers lay upon the company logo as a man photographs a commentary placed beneath a rock outside the Google China headquarters in Beijing on January 14, 2010. (Frederic J. Brown/AFP/Getty Images)

A bouquet of flowers lay upon the company logo as a man photographs a commentary placed beneath a rock outside the Google China headquarters in Beijing on January 14, 2010. (Frederic J. Brown/AFP/Getty Images)

The recent Internet attack on Google has alarmed Western enterprises in China. It has, in addition to China's loose patent rights and increasing pressure on companies to release sensitive information, prompted some high-tech German executives to warn of a possible exodus from the country.

According to a Jan. 15 article in Germany’s Handelsblatt (Commerce paper), Beijing will launch Chinese Compulsory Certification (CCC) regulations in May 2010 that will require companies to submit their IC design blueprints or software source codes in exchange for approval to enter the Chinese market.

The potential dangers for misuse of the regulations are very big, the article said. The EU Chamber of Commerce in China has publicly criticized China several times regarding the espionage problem, and one position paper mentioned that the standard demanded by the CCC’s could result in sensitive, detailed information not directly relevant to certification finding its way into the hands of corrupt Chinese.

The article also quoted German commerce representatives in Beijing saying this has become "the biggest export hindrance for European firms," and that quite a few German high-tech companies in the solar sector are shying away from going to China.

August-Wilhelm Scheer, President of the IT consortium BITKOM, also warned, "To couple the planned certification for certain IT security products with a requirement to reveal source codes will result in an exodus of innovative companies from China."

Patent rights also continue to be a big problem, according to BASF Chairman Hambrecht. He urged China to adopt the international standards of reciprocal certification.

According to the article, beyond Internet espionage, China also increasingly uses other means to obtain desired data or economically useful know-how. These include the new regulations in the area of certification of products and patents, as well as the growing use of Chinese spies in Western industrialized nations.

U.S. Chamber of Commerce: AmCham’s Concerns over Information Security

The Google incident has brought the issue of email security for foreign businesses in China to the forefront, including for AmCham.

In addition to high-tech industries, foreign enterprises in finance, communications, and chemical engineering are all facing the threat of being hacked. A chief in the finance industry said every company is now fearful that their technology can be easily stolen.

Two conflicts between foreign enterprises and Chinese authorities occurred last year, even though the former have been trying their best not to irritate the latter.

The first was the Chinese authorities’ requirement that all PCs sold in the country include the Green Dam Internet-censorship software—a move that was postponed indefinitely after strong objections were raised from dozens of technology companies.

The second was the widely condemned CCC issued last October and mentioned above—a controversy that has yet to be resolved.

Foreign media have touched the sensitive zone of information flow control by the Chinese Communist Party (CCP), therefore a choice had to be made between cooperation with the CCP or no business in China. Microsoft, Yahoo!, and Cisco have been criticized for choosing to cooperate with the CCP on information censorship.

The late U.S. Congressman Tom Lantos lambasted Yahoo’s leaders as moral “pygmies” when they handed over a user’s email information to the Chinese authorities. In 2002, Time Warner gave up a plan for a joint venture of its American Online in China, fearing Beijing would solicit its users’ email information.





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