More trouble at’ mill (or Chinese sweatshop)

factoryMore news on the continuing plight of Chinese workers in tech manufacturing plants, and the apparent blind eye the major multinationals are paying to their condition, emerged this week.

Li Qiang, founder of NGO China Labor Watch, claimed to the Congressional-Executive Commission on China on Tuesday that the audits which most MNCs commission aren’t worth the paper they’re written on.

He pointed to widespread bribery of auditing firms by the big name companies – basically, they bung a few thousand dollars and the auditors agree not to expose any problems in the factories which might require lots of money to fix.

Although Li didn’t accuse any outright of corruption, Dell, HP, Samsung and Apple were all said to have “severely flawed” auditing systems. He also exposed auditing firm Intertek as having been caugt in the past for accepting bribes.

Said firm has Samsung and Siemens as clients and a lot more tech companies besides.

Now the CECC is most definitely sympathetic to the aims of Li and his counterparts in other NGOs, and one can’t help thinking the reason they’re so keen to expose malpractice in China isn’t to get the workers a better deal but to force such a public outcry that US firms decide to bring jobs back to their homeland.

In fact, it was certainly mentioned several times at the hearing that US workers couldn’t hope to compete against factories where staff are paid a pittance and over-worked to the point of exhauston.

Whatever the motives, though, this needs stuff exposing – factory audits are commonly used by tech companies whose plants are found wanting, as a handy cure-all to keep the media and customers happy.

If they fail, there is literally no point – but we kind of knew that anyway. The only way to change things long term is consumer pressure on companies to improve working conditions followed up by independent and random inspections from NGOs.

Needless to say none of the tech companies above have come back to me.

The lack of response is not just typical of local PR failure – I’ll bite my tongue on that one for the time being – but endemic of the lack of transparency at these big tech brands. If they’re really confident in the conditions at the factories – dismiss such accusations out of hand, invite random inspections etc

Hopefully, as consumers and politicians get more savvy to what’s going on and start to ask more searching questions, these multi-nationals will find it harder to fob them off with the old audit card.

There’s a long way to go yet.

(More entries on this subject can be found here, here and here.)


Feeling gloomy? Asia has space for a few more IT managers

News this week from two separate recruiters gave a cautiously optimistic outlook for ex-pat IT pros looking for career development in Asia.

If you read my piece last week, you’ll know I’m a big fan of IT professionals having a well-rounded global view of the tech market if they’re going to do their job properly. To that end, the ultimate would of course be to move to Asia – or somewhere else far afield – to fully immerse into the different working environment and  a completely alien marketplace.

First, a dose of reality from some of my conversations with said recruiters recently.

It’s definitely not easy over here. The days of the glorious ex-pat package are definitely numbered and competition for the best jobs is fierce.

Secondly, the banking sector is not doing brilliantly. It’s not tanking to the extent we’ve seen in Europe but all risk is connected globally and in general the sector is not on a hiring spree, which means lots of candidates trying to jump ship to the commercial sector, according to Michael Page’s Hong Kong boss, Chris Aukland.

His firm’s latest Employee Intentions Report found IT pros in the SAR are less optimistic than any other professionals about their job prospects.

It’s not all doom and gloom though.

Hudsons released its Q3 predictions and found that around half of HK employers were looking to hire in tech, better than Singapore’s 35 per cent but not as optimistic as mainland China where over 56 per cent want new recruits.

Good communications skills are vital and specialist tech skills such as C#, .NET and Java are still in high demand, said Aukland.

For the ex-pat IT pro there are a few things to remember:

Be flexible; show yourself to be adaptable to new ways of working; prove yourself to be a good teacher of staff; and most importantly, be here, if you get that interview.

Failing that, an internal move is the best way to get over here, so start manoeuvring if you want to make it a reality. It won’t be easy but the experience will go far beyond anything you can articulate on a CV.


Asia Pacific falls! Western woes hit PC market

PCJust as the global PC market seemed to be getting back on track, Asia Pacific looks to be faltering.

Yes, IDC on Thursday released its predictions for Q2 shipments in the region and the results show a one per cent decline over 2011, with HP and Dell the biggest losers.

The irony in all this is that IDC is blaming economic turbulence in the West as a major cause for consumers and enterprises to tighten spending, thus sending shipments down.

It’s an interesting observation because it really highlights the global, interconnected nature of the economy, and by extension the IT market, today.

We know from the global meltdown of 2008 exactly what happens when the economic dominoes begin to fall in one region – eventually everyone gets sucked in to a lesser or greater extent.

Asian companies with risk exposure in the West or multinationals with offices in Asia may both have found recent economic sluggishness in the markets they operate in outside of Asia Pac has led to greater caution inside the region, which could partly explain the PC stats.

On the consumer side, meanwhile, IDC analyst Avi Sundaram told me the following:

This is more of a sentiment issue. Weakness in Western economies has affected growth in Asian countries as well, with GDP numbers going down across the region in the first half this year. This, in turn, has affected consumer confidence as well. Admittedly, it is not something specific to PCs, but given how PC buying is still a discretionary expenditure out here, consumers are pulling back on all such non-essential spending, including PCs.

So whether it’s shipments to Western countries being hit or the knock-on effect of economic woes in the West leading to lower spending inside Asia Pacific, bad news in the US and Europe may mean bad news for Asia.

It’s all one messed up, interconnected global market.

If nothing else, this should all serve as a reminder to the IT leader in the West that they need to keep an eye on what’s going on all over the planet and not just their home market to effectively manage risk, spot emerging trends, and basically do their job properly.


RIM’s big differentiator: staying out of China

RIM logoIn a startlingly refreshing display of honesty, RIM CEO Thorsten Heins has come out and said the firm is steering clear of China when it comes to manufacturing to reduce the risk of IP theft which could cripple its business.

It’s a bold statement, given that in my experience most tech firms – and even analysts – are very reluctant to discuss China in anything approaching critical terms, especially when cyber security is mentioned.

It’s certainly a valid point. I’ve reported in the past for The Register how many multinationals are suffering IP loss from their Chinese business units.

As RIM is teetering on the brink financially and seems only to be able to differentiate competitively from its rivals by virtue of the superior security capabilities of its handsets and infrastructure, any breach would be a huge blow.

That’s not to say it is necessarily safer anywhere else, but eliminating China from the supply chain could be a wise move.

Even the Chinese government has indirectly admitted its firms do not innovate enough themselves – the inference I’m drawing here is they nick a lot of IP instead.

Kenny Lee, a forensics expert with Verizon Business, sat down with me on Thursday to explain what hacking activity he’s seeing inside Hong Kong and Chinese firms.

Interestingly, while he did admit there was a fair amount of “low level” IP theft from firms in the region, mainly due to employees looking to set up their own businesses, there is a more insidious data leakage problem – technology transfers.

These agreements are usually foisted on foreign multinationals wanting to expand into China. The deal is that they have to partner up with a local Chinese firm by law to sell into the country’s huge market, and in doing so will usually need to share IP with them.

After a certain point, Lee explained, the Chinese partner usually has enough knowledge to pull out of the venture, having sucked all the IP it needs from its foreign partner.

There’s the rub for foreign firms such as BT, who can’t gain direct access to the market but equally reject the idea of handing over their hard-earned IP.

There’s no chance of things changing from the top anytime soon, so foreign firms will continue to have to weigh the risks and make that judgement.


Telstra is fine with VTech – nothing to see here

There’s an interesting development in the VTech scandal I wrote about last week – Telstra has decided to start selling its kit again.

Now, I don’t mean to be cynical here but the Aussie telco giant only decided to pull VTech products temporarily from its shelves about a week ago after a report broke detailing serious human rights and labour abuses.

It provided me with the following statement today:

We are satisfied with the outcomes of our investigation and we will resume sales of the handsets in our branded stores.

So a week is all it takes to satisfy the many and very serious charges levelled by the report from not-for-profit the Institute for Global Labour and Human Rights?

There could be a few explanations for what just happened:

  • The report is a complete fabrication and Telstra was quickly able to establish this
  • Telstra is doing this for purely commercial reasons – Vtech apparently makes all of its fixed line phones – and is still investigating behind the scenes
  • Telstra has been made assurances about VTech conditions by the company and has naively accepted them without investigating first hand.

Given that conditions in electronics factories in the Pearl River delta are known to be pretty awful, I think the first option is pretty unlikely.

Having made the bold step of removing VTech products in the first place to presumably head off any negative publicity at the pass, Telstra has opened itself back up very quickly.

No word yet from other big name tech vendors involved, including Motorola, Philips etc. Presumably if they agree with Telstra, then we can all sleep easy. Or not.

Final word to Geoff Crothall from HK-based rights group the China Labour Bulletin who told me the following:

Of course, one week is not long enough to fully investigate such claims. The only way to really understand working conditions is to listen to the workers. But before you do that you need to gain their trust and demonstrate that their complaints will be taken seriously and that mechanisms are in place to resolve their complaints.

Methinks this one is set to run a little longer yet, and could drag the names of the big tech brands involved further into the mire if they haven’t gotten their crisis management strategies  right from the outset.


VTech next in line for the Foxconn treatment

factoryJust finished a beast of a story detailing more depressing news from China of  human rights and labour violations in factories making tech kit for some of the West’s biggest brands.

Yup, it’s not Foxconn this time but Hong Kong-headquartered OEM VTech, which mainly seems to make cordless and fixed line telephones for the likes of Motorola, AT&T, Telstra, Sony and others.

The report into poor working conditions at its Guangdong factories list, if anything, worse abuses to those discovered at Foxconn. These include mandatory and excessive overtime; exposure to harmful chemicals; sub-standard living conditions; violence and bullying towards staff; and below subsistence wages.

It’s worth noting that VTech strenuously denies all the allegations.

I’m not disputing any of the findings of the Institute for Global Labour and Human Rights, nor its deliberately confrontational tone and emotive, first-person testimonials from workers at the plant – after all it needs to shame the Western companies involved into taking action.

What is more interesting is what happens now that the genie is out of the bottle.

Motorola and Telstra reacted with shock, exclaiming that compliance with the law and their own codes of conduct are essential and that, if true, these abuses are unacceptable.

Fair play to Telstra for immediately suspending sales of any VTech products while it investigates, but it seems to me that large Western technology firms are more than happy to turn a blind eye to this kind of thing as long as the labour is cheap, the production costs are kept down and no-one is making a fuss.

Saying you mandate compliance with a code of conduct but never enforcing that compliance, for example, is less than useless. As is saying compliance with local laws is compulsory when you know that, as in China, local laws are not worth the paper they’re written on – they’re either not enforced or shot through with so many caveats that the employer can effectively do what they like.

There are those who say that improving conditions in these OEM factories will push up prices at the till.

Well, that is debatable given that the OEMs are making a healthy profit here and could probably stretch to curtains and mattresses in the dorms; better food in the canteens; and certainly stools for workers to sit on during their shifts, without pushing up the cost of production too much.

I think Foxconn was just the beginning. Any tech manufacturer that breathed a sigh of relief, thinking the buck stopped with Apple, better prepare themselves for a rather uncomfortable time going forward.

Bad publicity is the only thing that seems to spur these big name brands into action and as long as there is an appetite among the public to know what misery lies behind their latest shiny gadget then the stories will keep on coming.

Geoff Crothall, a spokesman for not-for-profit the China Labour Bulletin, told me that conditions like those highlighted in the report are endemic throughout factories in the Pearl River Delta.

The best that can come of the constant media scrutiny is that these brands and their OEMs are forced to institute regular inspections and improve living and working standards across the board, because the local government certainly isn’t going to.


China pricing itself out of the market for ex-pat IT talent

moneyA lot of the time when you’re battling deadlines or trying to sniff out breaking news stories, there’s not enough opportunity to look beyond the analyst reports, product launches and trade shows to take a more rounded view of the industry.

One of the most interesting things about watching the technology landscape from the vantage point of Hong Kong is how Asian countries are reacting and adapting to life in the shadow of China.

If local IT industries really want to thrive alongside this giant they must have access to a stream of excellent candidates – whether these are home-grown or shipped in from abroad.

I’ve written a few pieces for The Reg Jobs section now about the market for ex-pat IT professionals and while the opportunities for those cushy international reassignment packages are dwindling, there are still some great opportunities to be had if you have the right skills.

The key points to remember:

  • Local language and cultural understanding – language skills being near obligatory for work in mainland China, and ideally experience of working there previously.
  • Flexibility – kind of ties in with cultural understanding, but an ability to absorb pressure and adapt to new ways of working is key, as is any indication you may be willing to be flexible on relocation packages.
  • Good interview technique – sounds basic but employers are getting  more and more picky. You need to do your research on the company and convince them of the above points, and that you’re a good cultural fit for the organisation.
  • Technology know-how – it needs to be broad and deep and in one of the key areas Asian firms are looking for, like cloud or e-commerce.
  • Be a good teacher – the thirst for knowledge, especially in China, is huge so being able to communicate effectively with your team will make you an invaluable asset…until they’ve learnt everything.

China is far from hoovering up all the best foreign IT talent, of course, given the prescriptive language skills which most IT pros have to have to work in the country. It is also being placed increasingly on the back foot thanks to changing standards of living in the PRC, which could benefit places like Hong Kong and Singapore again.

ECA International, which produces data with which firms can work out ex-pat packages, revealed in its latest annual Cost of Living Survey that Beijing and Shanghai are now more expensive to live in the Hong Kong, while Shenzhen and Guangzhou are likely to overtake pretty soon.

A strong currency and high inflation – especially on goods foreigners buy – is making the case for placing candidates in China less compelling.

ECA regional director, Lee Quane, told me that although once you add in accommodation, HK probably tops the Chinese cities again, they are definitely catching up. Considering the higher rate of tax and social security burden in China than say Hong Kong or Singapore, mainland cities may soon prove less palatable destinations for multinationals to send staff to, especially if they can work in virtual teams.

It’ll be interesting to see how this one plays out, although as always, if you are a truly indispensable IT pro, a firm will get you at whatever cost.


BT screaming to be let into China

bt logoBT is one of those firms which has a habit of attracting bad headlines. Run ins with the regulators, misleading advertising campaigns and tales of shockingly bad customer service all spring to mind. Not so in Asia Pacific, it seems.

At the Asia Pacific Influencer Summit (yes, I am an influencer now apparently) hacks from all over A and Pac were told just how amazingly well BT Global Services is doing – the firm now boasting over 2,500 employees in nine countries across the region.

There were a few news announcements, including a new ‘retail in a box’ solution for retailers looking to tap the Chinese market, a new app designed to make it easier to manage roaming calls and save money in the process, and the launch of a data visualisation service which BT has used itself in the battle to protect its copper cables from being nicked.

The most interesting story, though, came from the APAC president Kevin Taylor, who spoke with refreshing candour about the telecoms giant’s problems with China.

He claimed China has the least advanced regulatory environment of any ‘big player’ in the world and accused it of taking a rather immature approach to competition in the country. Foreign telecoms firms cannot obtain licenses to sell their kit in the country directly, meaning they have to resort to partnerships – which BT has with China Unicom and Telecom – or joint ventures.

BT has eschewed the latter, Taylor said, because at present the foreign firm in a China JV is allowed up to only a 49 per cent share of the business. They would consider it otherwise, he added, but I reckon there may be other factors holding it back.

It’s well known now that JVs of this type usually end badly for the foreign investor. As has been claimed happened with AT&T, the Chinese will take you in, get you teach them all you know and then ditch you – possibly minus a chunk of your IP.

There are rumours – only rumours – that security concerns were behind the split between Symantec and Huawei over their JV, for example.

In the meantime, BT is “screaming” at China to be let in, its China MD Eliza Kwok told me. So what are the chances of it being able to sell directly into the country anytime soon? The smart money is on zero.

Forget that China Telecom has been allowed to set up a virtual network in the UK for Chinese ex-pats, back home in the People’s Republic it is a very different story. Here, protectionism is the watchword for government policy, and that is unlikely to change for a long, long time.


Google turns up the heat on China’s state-sponsored hackers

padlockIn an interesting development, Google this week announced that it would be notifying its Gmail users if they are under attack from state-sponsored hackers.

The web giant will flash up a red alert warning if it suspects foul play, hoping to spur its users into taking action to protect their account.

Google VP of security engineering Eric Grosse had the following:

Here are some things you should do immediately: create a unique password that has a good mix of capital and lowercase letters, as well punctuation marks and numbers; enable 2-step verification as additional security; and update your browser, operating system, plugins, and document editors. Attackers often send links to fake sign-in pages to try to steal your password, so be careful about where you sign in to Google and look for https://accounts.google.com/ in your browser bar. These warnings are not being shown because Google’s internal systems have been compromised or because of a particular attack.

Rather cryptically, Google said it couldn’t divulge exactly how it knows when state-sponsored actors are at work, so I guess users just have to put their faith in the company.

The move is a positive one for the user community – any additional measures to help educate users and protect the internet community at large are a bonus in this day of advanced cyber threats.

But just as interesting is the message Google is sending to that number one source of state-sponsored hacking: China. Just a week earlier the web giant, which famously pulled its search servers from the People’s Republic after the Operation Aurora APT-style hacking campaign hit its staff, announced new anti-censorship capabilities.

Well, to be more precise it said it would tell users – for the first time in China – when their search results were being blocked by the Great Firewall, a move which will not have gone down well in Beijing.

Now Google is at it again – under the guise of securing its users, it is making things more difficult for China’s army of state-sponsored hackers.

Not that it will deter them in any meaningful way – most will still be able to find their way into a target network if they really need to, which is what makes APTs so difficult to defend against.

Rob Forsyth, APAC director for security firm Sophos, told me that “irrespective of the validity of the threat, Google’s advice is good”.

“In these troubled times with organisations being breached, this has never been more important, in particular, do not have the same password on multiple social networking sites,” he added. “Long passwords = good.”

But how does Google actually know if an attack is state-sponsored? Well, it all comes down to the code base, according to Forsyth.

“You can tell if a single person has written/compiled it, or whether a large team has been involved,” he said.

“Further, it often has to do with the payload – what is the malware trying to do?  Espionage will look different to attacks focused on avarice.”

Interesting times for Google and China – I wonder what the Party thinks of the latest developments?


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.