U.S. Tech Firms Protest China Actions on Wi-Fi
Fri December 12, 2003 04:09 PM ET
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By Daniel Sorid
SAN FRANCISCO (Reuters) - U.S. electronics companies, eager to supply a rapidly growing Chinese market, are protesting a decision by Beijing to regulate the sale of wireless networking equipment inside the country.
The rules, which went into effect on Dec. 1 but include a grace period until June, require that wireless networking gear sold in China incorporate a locally developed encryption scheme to which only 11 Chinese companies have access, said Dennis Eaton, chairman of the Wi-Fi Alliance, an industry group.
Eaton said U.S. industry and government officials, concerned about the disruption the measure could have on shipments, have appealed to the Chinese to consider alternatives, thus far to no avail.
"The Chinese have not offered any compromise position," Eaton said. "We don't have any expectations at this point that they'll repeal it."
Wi-Fi, the most popular wireless networking system, has blossomed into a $3 billion industry and is quickly transforming the way businesses and consumers connect to the Internet. China remains a tiny piece of the market but is expected to grow to $250 million in sales by 2005, Eaton said.
Publicly, large U.S. technology suppliers including Intel Corp. (INTC.O: Quote, Profile, Research) and Cisco Systems Inc. (CSCO.O: Quote, Profile, Research) will only say they are studying the rules.
Eaton, however, said supplier of Wi-Fi products have expressed confusion about the rules and concern about the impact they might have on developing products, which would need to accommodate the Chinese encryption technology, called WAPI.
"Our member companies are very concerned both just due to the very abrupt nature of things and the lack of information and the little time they've had to prepare and work WAPI into their product plans," Eaton said.
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