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.
On the Heels of Google’s Announcement
Just days before, on Jan.12, Internet-search giant Google stunned industry analysts and market watchers as well as its critics by announcing that it would stop censoring its search results on Google.cn, the mainland Chinese version of Google tailored for a Chinese audience and launched in 2006.
A post on Google’s official blog at 3:00 p.m. that day said that over the next few weeks the company “will be discussing with the Chinese [regime] the basis on which we could operate an unfiltered search engine within the law,” and that the “decision to review our business operations in China … will have potentially far-reaching consequences.” It was signed by David Drummond, senior vice president of Corporate Development and Chief Legal Officer of Google.
The Chinese Communist Party’s (CCP) track record of repressing dissent and censoring the Internet may mean that Google cannot operate an uncensored search engine in China, a possibility acknowledged by Mr. Drummond. “We recognize that this may well mean having to shut down Google.cn and potentially our offices in China,” he wrote.
Attacks by Chinese Hackers
Part of what led Google to review its cooperation with the CCP was a series of cyber-attacks targeting both Google and other U.S.-based tech companies.
In mid-December, Mr. Drummond wrote that Google detected a “highly sophisticated and targeted attack on our corporate infrastructure originating from China that resulted in the theft of intellectual property from Google.”
Following an investigation carried out in league with 20 other companies, Google reported that the cyber-attacks were made on a large sector of the industry. The primary goal of the attackers was to access the Gmail accounts of Chinese human rights activists. Google stated that “accounts of dozens of U.S.-, Chinese-, and European-based Gmail users who are advocates of human rights in China appear to have been routinely accessed by third parties.”
The Jan. 12 blog concluded that “these attacks and the surveillance they have uncovered, combined with the attempts over the past year to further limit free speech on the Web, have led us to conclude that we should review the feasibility of our business operations in China.”
Google is not the first to exit China, nor will it be the last. Under the CCP’s tyranny, more and more foreign enterprises in China will follow Google.
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