China wants to censor and innovate but can’t do both

chinese flagI covered a curious story this week detailing the latest Politburo edict on how China intends to be a technology superpower in a few short decades.

Now normally pronouncements from high up in the Party are pretty anodyne statements filled with ever higher targets to be reached and plenty of political jargon but this one stood out in terms of what the careful commentator can read between the lines.

Yes, there was the usual rhetoric about reaching targets – in this case to become an “innovation-oriented country” by 2020 and a “world technological power” by 2049.

But there was also a rare near-admission of failure – the “severe challenges” which technological development in the country faces. The government even admitted it needed to airlift in some “high calibre” foreign talent to help it out.

What I find fascinating about the desire to become a “world technological power” is that China is sort of one already really, with huge global companies like Huawei and Lenovo.

On the other hand, the admission that it hasn’t innovated enough in the past would lead many to argue that this is because its firms have gone on a decades-long and unparalleled spree of industrial espionage for Western firms to accelerate their development thus far.

The subtext is it wants to be number one or thereabouts, in every part of tech, and this will require it to innovate like never before and internationalise.

However, here’s why I don’t think it will be able to do this, at least in the world of the web – censorship and control.

I’ve spoken to several experts in the area of censorship and they all agree – you can’t nurture a truly innovative web industry if you’re requiring any firm with user-generated content (UGC) to spend hefty sums censoring that content or running the risk of getting shut down completely if the government doesn’t take kindly to what you’re doing.

Former CNN Beijing bureau chief Rebecca MacKinnon told me any firm wanting to get involved in UGC would be in a “very tough business” in China, while Charles Mok, founding chair of the Hong Kong Internet Society, argued that web firms in the PRC had gotten lazy over the past 10-15 years.

“They just need to put a spin on what others are doing with Chinese characteristics – Western companies can’t do this,” he said. “There is a sense that ‘I just need to do what you are doing and not get shut down’.”

Now I’m not saying UGC is the be-all-and-end-all but there aren’t many cutting edge web firms these days which don’t feature some form of it.

Ultimately this indigenous innovation piece will take decades to achieve anyway, but if it’s going to happen it’ll have to do so alongside the restrictive controls of the state, and I can’t really see that happening.

It’s interesting to see Sina roll out its credit system to users this week. I guess that’s an example of a Chinese web firm trying to innovate, but only to make its self (or state-mandated) censorship restrictions on content appear more palatable.

What kind of social media platform asks its members to snitch on others if they see them breaking the rules? (rules which, by the way, prevent such terrible things as spreading rumours or calling for mass gatherings).

It has effectively turned all that is good about social media – collaborating, sharing, freedom of expression – and turned it on its head so that fear, suspicion, and self-interest prevail.

It will be a sorry state of affairs if a nation that demands that of its technology providers becomes the pre-eminent global tech superpower.

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Don’t panic Samsung – China’s tech spending is not slowing

I covered a story this week detailing comments Samsung China’s CEO Kim Young-ha apparently made to the FT, which basically summarised are – China’s austerity measures are dampening down consumer spend and this is BAD news for IT suppliers everywhere.

Now, I’m not suggesting Mr Kim doesn’t have his finger on the pulse over in that there China.

After all, Samsung has such a broad portfolio of electronics items covering virtually every conceivable category, from NAND chips to tablets, that the company should be a good canary down the mine when it comes to taking the pulse of the IT market in China, if you’ll excuse the mixed metaphor.

However, the piece overwhelmingly came across to me as fear-mongering. Kim told the paper that the Chinese government’s austerity measures targeted at the housing market had gone a bit over board and were having an impact on consumer spending.

Yet there is no evidence for this, aside from a brief reference to the fact that TV sales were disappointing in the recent Golden Week holiday period, and an unsubstantiated prediction from Kim that the domestic tech market would likely grow by just seven per cent in 2012.

I’m not sure whether this can quite be viewed as incontrovertible evidence that there is a decline, but even if spending were to slow down slightly, it’s still way above that of the West and probably had to slow down at some point.

The other benefit IT manufacturers have when it comes to the Chinese economy is that government feels much less beholden to international markets – within reason – and much more capable of acting swiftly and decisively to address any economic instability; whether this means slowing down one part of the economy or injecting a bit of stimulus in another part.

To top it all off, the signs from the analyst houses are all pretty rosy when it comes to IT sector growth in China. IDC predicts a surge in consumer tech spending of nearly 30 per cent while IHS iSuppli says PC sales there will grow 13 per cent this year.

The times they are a-booming in the PRC, despite what Samsung says.


Launching in China? Dream on Facebook

great wallThe debate over whether Facebook is set to launch in China has sparked off again this week as the social networking giant launches its IPO bid. To be honest it’s all headline grabbing claptrap which adds nothing new to the arguments that were made at the time the IPO filing was first made.

The most remarkable story came from state-run rag the China Daily, which, without a hint of irony, wondered out loud “Is China Facebook’s next step?” without once mentioning the fact the site is BANNED there.

Back when the IPO filing was first made with the SEC, I commented that it was obvious Facebook wants to appeal to potential investors and show it is considering expansion into the biggest web market in the world. Of course it would want to do this, especially as growth rates in other regions are slowing, but whether or not it can enter China is  completely out of its hands.

It won’t happen for several reasons:

  • Facebook is blocked in China and would have to literally bend over backwards to accommodate the kind of rigorous censorship demanded of China’s home grown social media – the media backlash and damage to its reputation would hurt too much I imagine, to make this even a possibility.
  • Even if it was prepared to censor content – and potentially bin parts of the platform deemed unsuitable – there’s no inclination the Chinese government would even want it in the PRC. Its Chinese rivals are doing just fine over there thanks very much.
  • Similar to the above point, is there any suggestion Chinese users would take to the platform? Alright, around 500,000 are said to be accessing it from China with VPNs etc but remove the ability to connect in an uncensored way with users in other countries and you’ve kind of removed the reason why it may be popular to users there in the first place.
  • China is in a period of super-paranoia at the moment. The Bo Xilai scandal and the Chen Guangcheng case are making the leadership look like a bunch of turkeys at a very politically delicate time, ahead of next year’s once-in-a-decade Party leadership handover. If ever Facebook had a chance of launching in the country, this isn’t it.
  • Zuck has reportedly held numerous meetings with Chinese web firms, and most likely has already tried to set-up some kind of joint venture or new service for the huge market there. These efforts appear to have come to nothing.

As ex-CBS bod and Sinophile Bill Bishop writes: “Facebook is blocked, the government is not allowing the company to set up operations, even in a regulatory compliant joint venture with a trusted Chinese internet firm like Baidu, and the SNS market is already quite mature, overfunded and overcrowded.”

In short, dream on Facebook.


Is Hong Kong safe from Advanced Persistent Threats?

hong kong skylineMy past week has been dominated by Hong Kong’s 13th Info-Security Conference on Tuesday and Wednesday and interviews with the Special Administrative Region’s CIO Daniel Lai and high profile IT legislator Samson Tam.

What I found out about the SAR is that when it comes to cyber security, many of the same key trends and themes discussed the world over are present here – perhaps with one notable exception, state-sponsored, APT-based cyber espionage.

Backtracking slightly, Tam is a Legislative Councilor for the functional constituency of Information Technology, which means in practice that he is not one of Hong Kong’s elected leg councillors but that he does know what he is talking about, having been chosen for the role based on his experience in the tech biz.

As in the UK, various political hot potatoes include digital copyright – the Copyright (Amendment) Bill 2011 is currently being considered – data breach notification laws – also being considered – and more funding for the region’s high-tech crime unit.

If anything, Hong Kong is a little way behind the UK and US in terms of the maturity of its cyber crime and digital copyright laws, and has only recently decided to plough more resources into IT, with the launch of a Technology and Communications Bureau.

What I’m wondering, though, is whether Hong Kong organisations – public and private – are at risk from quite the same threats as their counterparts in the UK.

There could be an argument for saying – as I alluded to in my last post – that to an extent Hong Kong institutions and enterprises are shielded from the kind of state-sponsored, or at least sanctioned, attacks which have caused so many problems for Western organisations because they are technically part of China.

In the past six months, the only major security incident that has really made the headlines here has been a DoS attack on the Hong Kong Stock Exchange. Now either I’m not paying enough attention, the English language media isn’t interested, firms are not reporting such incidents, or there are indeed fewer to report.

Not so said Tam, who claimed that HK has its fair share of problems to deal with, although interestingly he said most attacks came from “smaller countries with looser local controls”, and he played up the importance of cross-border police co-operation to combat such attacks.

“These attacks are mainly financially focused because Hong Kong is a small region which doesn’t have many political, cultural or religious tensions,” he added. Read into that what you will.

Earlier at the conference, Lai explained to me that his department – the Office of the Government CIO – works closely with the Hong Kong CERT to develop policy and best practice, but he was more vague on the nature of the threat landscape.

“We don’t really see espionage as such – it’s difficult sometimes to guess a hacker’s motives. Awareness raising and diligence are key,” he added.

I’m hoping to speak to the HK CERT next week so I may have more insight into this space then, but even if there was a degree of protection offered to the region when it comes to state-sponsored cyber espionage attacks, multinationals in Hong Kong and China certainly can’t afford to let their guard down.

Ian Christofis of Verizon and the Cloud Security Alliance argued at the event that China-based multinationals are increasingly under threat from IP theft thanks to malicious insiders. Perhaps looking at the whole scenario as China vs the rest of the world is overly simplistic.