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Strategies & Market Trends : China Warehouse- More Than Crockery -- Ignore unavailable to you. Want to Upgrade?

To: RealMuLan who wrote (2767)	3/11/2004 1:43:22 PM
From: RealMuLan	Read Replies (1) \| Respond to of 6370

Should U.S. Companies Build to China’s Tech Standards? So far, the straightest shooter in the standoff between U.S. technology companies and the Chinese government appears to be Chen Yuping, a director at the China Academy of Telecommunication Research. When Intel announced this week that it would be unable to meet a June 1 deadline for incorporating Chinese encryption standards for wireless computing in its chips, Yuping told The Wall Street Journal that it didn’t much matter, because China has chip makers too, and “we don’t have to depend on your products to survive.” Yuping wasn’t bluffing about China having chip makers. Intel itself is putting nearly $1 billion into two Chinese plants; LMNT, a new Korean chip producer, is building a $1.5 billion Chinese plant; and SPS, an American company, is investing $800 million in another. In contrast to Yuping’s unwelcome candor, Intel spokesperson Colleen Rubart told the Journal that the reason the company couldn’t meet the deadline was that it hadn’t “been able to find an approach that meets Intel’s quality standards while also following China’s requirements.” That could be true, or it could be partially true. Or, it could be that there is just no way in hell that Intel or any other U.S. company is going to cave to a direct challenge from China so early in a game that could end with China ruling the world of consumer electronics. Not that U.S. companies have never made anything in accordance with the technological standards of other countries. They do that all the time, but this time, it’s different. This time it’s China, a country with the world’s fastest growing market for personal computers, not to mention every other gizmo that now graces the shelves of Circuit City and Best Buy. And this time, it’s the Chinese government, rather than an industry association, that has drawn the line in the sand, requiring that all PCs, cell phones and other wireless gadgets use an encryption standard that is unique to China. U.S. manufacturers and trade officials see this challenge as the first step toward a slippery slope that would encourage China to set its own standards for other technologies. So? Is that really such a big deal? Not this year. But China’s market is expected to grow so large so quickly that inexpensive Chinese technologies produced for a domestic market could someday dominate the world. And if those technologies have their own standards, not ours, U.S. patent-holding companies could kiss many a lucrative royalty payment good-bye. ... According to The Wall Street Journal, the Chinese appear to be genuinely surprised by the intensity of U.S. resistance, and may consider some compromise, such as postponing the deadline by which chips must meet the new standards. That would be the diplomatic thing to do. Certainly, it would give Intel more time to “find an approach that meets Intel’s quality standards while also following China’s requirements.” If, of course, that’s what the world’s largest chip-maker really intends to do. What would your company do? Are trade officials unnecessarily alarmed? How should U.S. technology companies respond to China’s demands? comment.cio.com