Technology and China
Jun 9th 2010, 21:34 by L.S. | LONDON
When Google pulled out of China back in March, it must have hoped that other Western technology heavyweights would show a little solidarity. Not that it expected others to follow suit, but at least some declaration of support. It didn't happen. In fact, Bill Gates suggested that Google's move was nothing more than a publicity stunt: “They’ve done nothing and gotten a lot of credit for it,” he said.
Mr Gates' reaction is partly to be explained by Microsoft's rivalry with Google. But his attitude—and that of most other IT executives—can largely be explained by the fact that the industry's centre of gravity continues to move east (or west, seen from Silicon Valley): in IT, China is hard to ignore. The country is not just the sector's biggest factory floor: Foxconn, the world's largest contract manufacturer, which made headlines after a series of suicides in its factory city in Shenzhen, employs 800,000 workers, most of them in China. It is also home to two of the largest telecoms equipment makers, Huawei and ZTE. And China is now even more important as an IT market after its government started promoting domestic demand in the wake of the financial crisis.
China's power in IT will only grow. It is pushing its own set of technical standards, not least by co-operating with Taiwanese firms (such as MediaTek, which makes most chips for handsets that are built in China). And at a conference of high-level representatives from both countries it emerged that they may promote Google’s Andoid as the operating system of choice.
China is trying to promote national IT champions, in particular the Semiconductor Manufacturing International Corporation (SMIC), a chipmaker. Also this week, the Chinese government bought a stake in MIPS Technologies, a California chip design firm. To boot, it has an ambitious R&D agenda, for instance in supercomputing. A Chinese supercomputer, the New York Times recently reported, is already ranked as the world's second-fastest machine ahead of European and Japanese systems.
Is this development cause for concern? For one, there is the question of intellectual property. Some have accused Huawei of copying Western technology. It is not always clear who controls China's IT giants. More than one is suspected to have close ties to the army. Predictably, this has triggered security concerns (Huawei has been kept from making an acquisition in the US—and has recently hired an ex-Bush official to change minds in Washington). Then there are pressing questions about the working conditions in Chinese factories as well as the environmental damage they cause.
But from a purely economic perspective, it does not come as a surprise—and should even be welcomed as part of a more balanced global division of labour in IT. Why should China just put together cheaply what others have designed?
Mr Gates' reaction is partly to be explained by Microsoft's rivalry with Google. But his attitude—and that of most other IT executives—can largely be explained by the fact that the industry's centre of gravity continues to move east (or west, seen from Silicon Valley): in IT, China is hard to ignore. The country is not just the sector's biggest factory floor: Foxconn, the world's largest contract manufacturer, which made headlines after a series of suicides in its factory city in Shenzhen, employs 800,000 workers, most of them in China. It is also home to two of the largest telecoms equipment makers, Huawei and ZTE. And China is now even more important as an IT market after its government started promoting domestic demand in the wake of the financial crisis.
China's power in IT will only grow. It is pushing its own set of technical standards, not least by co-operating with Taiwanese firms (such as MediaTek, which makes most chips for handsets that are built in China). And at a conference of high-level representatives from both countries it emerged that they may promote Google’s Andoid as the operating system of choice.
China is trying to promote national IT champions, in particular the Semiconductor Manufacturing International Corporation (SMIC), a chipmaker. Also this week, the Chinese government bought a stake in MIPS Technologies, a California chip design firm. To boot, it has an ambitious R&D agenda, for instance in supercomputing. A Chinese supercomputer, the New York Times recently reported, is already ranked as the world's second-fastest machine ahead of European and Japanese systems.
Is this development cause for concern? For one, there is the question of intellectual property. Some have accused Huawei of copying Western technology. It is not always clear who controls China's IT giants. More than one is suspected to have close ties to the army. Predictably, this has triggered security concerns (Huawei has been kept from making an acquisition in the US—and has recently hired an ex-Bush official to change minds in Washington). Then there are pressing questions about the working conditions in Chinese factories as well as the environmental damage they cause.
But from a purely economic perspective, it does not come as a surprise—and should even be welcomed as part of a more balanced global division of labour in IT. Why should China just put together cheaply what others have designed?
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