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New China rules threaten proprietary information of tech cos
1 May 2010, 1858 hrs
New York Times
BEIJING: China is expected to issue regulations requiring technology companies to disclose proprietary information like data-encryption keys and underlying software code in order to sell a range of security-related digital technology products to government agencies, American industry officials said Friday.
But they said it remains unclear how vigorously Chinese officials would enforce the new rules, which already are watered down from a sweeping proposal first raised in 2007.
Both the American and European technology industries have contended that the rules are unworkable and that they amount to trade protectionism.
One concern is that the rules will permit key foreign technologies to leak to Chinese competitors.
The European Union’s chief trade official, Karel de Gucht, said in a visit to Beijing this week that the rules have “no real base in reality” and urged the Beijing government to overhaul them.
The regulations, set to take effect May 1, largely affect sales of network routers, smart cards, firewall software and other products involved in protecting digital data. They would require software and equipment from both Chinese and foreign companies to meet new technology standards before being certified for sale to government agencies.
To be certified, companies apparently would have to give government-connected testing laboratories encryption algorithms, software source code and design specifications that, for many of the products, are regarded as sensitive trade secrets.
In interviews, American industry officials argued that the rules not only seek details well beyond what is needed to certify the products, but that there are few safeguards to secure the proprietary information from outsiders.
“Even if you’re not talking about the really sensitive stuff, it’s not clear yet how product information will be protected or secured while it is running through the testing process,” John Neuffer, a vice president at the Information Technology Industry Council, a trade group based in Washington, said in a telephone interview.
“China asks for companies to go through testing labs that are essentially state-owned, government-owned,” he said. “That’s the sensitive part.”
The regulations are part of a long-running argument between Western technology companies and the Chinese government over the West’s access to Chinese markets. In the past month, China averted another dispute by rolling back a second plan aimed at giving Chinese companies an advantage in government technology purchases.
But foreign companies still contend that the latest regulations will grant Chinese companies an unfair edge in government sales, a comparatively small but growing part of the market here.
They also worry that the disclosure rules will enable Chinese competitors to copy Western technology. When the 2007 certification proposal was first introduced, some Chinese officials cast it as part of a broader campaign to help the nation’s computer-technology companies gain ground against more advanced Western competitors.
.
1 May 2010, 1858 hrs
New York Times
BEIJING: China is expected to issue regulations requiring technology companies to disclose proprietary information like data-encryption keys and underlying software code in order to sell a range of security-related digital technology products to government agencies, American industry officials said Friday.
But they said it remains unclear how vigorously Chinese officials would enforce the new rules, which already are watered down from a sweeping proposal first raised in 2007.
Both the American and European technology industries have contended that the rules are unworkable and that they amount to trade protectionism.
One concern is that the rules will permit key foreign technologies to leak to Chinese competitors.
The European Union’s chief trade official, Karel de Gucht, said in a visit to Beijing this week that the rules have “no real base in reality” and urged the Beijing government to overhaul them.
The regulations, set to take effect May 1, largely affect sales of network routers, smart cards, firewall software and other products involved in protecting digital data. They would require software and equipment from both Chinese and foreign companies to meet new technology standards before being certified for sale to government agencies.
To be certified, companies apparently would have to give government-connected testing laboratories encryption algorithms, software source code and design specifications that, for many of the products, are regarded as sensitive trade secrets.
In interviews, American industry officials argued that the rules not only seek details well beyond what is needed to certify the products, but that there are few safeguards to secure the proprietary information from outsiders.
“Even if you’re not talking about the really sensitive stuff, it’s not clear yet how product information will be protected or secured while it is running through the testing process,” John Neuffer, a vice president at the Information Technology Industry Council, a trade group based in Washington, said in a telephone interview.
“China asks for companies to go through testing labs that are essentially state-owned, government-owned,” he said. “That’s the sensitive part.”
The regulations are part of a long-running argument between Western technology companies and the Chinese government over the West’s access to Chinese markets. In the past month, China averted another dispute by rolling back a second plan aimed at giving Chinese companies an advantage in government technology purchases.
But foreign companies still contend that the latest regulations will grant Chinese companies an unfair edge in government sales, a comparatively small but growing part of the market here.
They also worry that the disclosure rules will enable Chinese competitors to copy Western technology. When the 2007 certification proposal was first introduced, some Chinese officials cast it as part of a broader campaign to help the nation’s computer-technology companies gain ground against more advanced Western competitors.
.
