No.374 May 22, 2009
Special Issues  
USITO Roundtable with Ministry of Commerce Delegation
USITO Event with Director General of Standardization Admin. of China (SAC)
 

On May 15, 2009, the Ministry of Commerce (MOFCOM) sent a delegation to meet USITO member company representatives to discuss a spectrum of U.S.-China trade issues in the ICT sector. The MOFCOM delegation was led by Wang Hongbo, head of MOFCOM's U.S. affairs, and joined by Zhang Delu, Counsellor of WTO Affairs, Chen Xiuqiang from the Treaty & Law Dept., etc. The USITO side was led by four USITO work group chairpersons and key member company reps. Members please click here for meeting notes.

Top Story

MIIT Issues Government Procurement Administration Measures

On May 11, 2009, the Ministry of Industry and Information Technology (MIIT) issued a circular entitled "MIIT Government Procurement Administration Measures", regulating the government procurement activities of MIIT and all its direct subsidiaries. According to MIIT website notice, the circular was formulated on the basis of the ¡°Government Procurement Law of P.R.C¡± as well as the ¡°Implementation Measures for Central Government Agency Government Procurement Activities¡±.

The circular contains ten chapters and 43 articles, was effective since May 11, the promulgation date. The Financial Department of MIIT is responsible for overseeing and enforcing the rules embodied in the circular. The circular states that the government procurement activities refer to the ¡°Buyers' activities to purchase the goods, projects and services which fall into the centralized government procurement catalogue issued by the State Council¡­¡±; and that there are three levels of government procurement: government centralized procurement; department centralized procurement; and the branches' self-initiated procurement.

The circular identifies six types of government procurement protocols such as public tender, invitation tender, competitive negotiation, etc. It further specifies the responsibilities, roles, and obligations of all involved parties in the three-level government procurement framework. For instance, the first two levels must use third party government procurement agencies to execute the related activities, and for most uncertain cases, the Financial Department of MIIT will report to the Ministry of Finance, China's top authority for government procurement, for the latter one's discretion. MIIT.gov.cn, 5/11/2009

USITO Notes: Government procurement has growingly served as a policy tool to foster domestic industries, as in recent years we saw the unremitting efforts by various Chinese authorities to formulate rules regulating government procurement activities to favor domesic products. We reported in early April that the State Council issued a circular that ¡°all government agencies must procure domestic products if the products are available¡±. Following this top guideline, at the ministerial level the spirit was well echoed, like this new MIIT circular. In Article 13 of Chapter II, the MIIT states ¡°Government Procurement shall give priority to domestic products, projects and services¡­as well as indigenous innovation products¡±, except two outliers ¨C if no such things available from domestic companies; and if the stuff are used beyond Chinese territory.

A few MIIT circulars have also stated clear support to domestic products by means of government procurement, such as the 5-year and 15-year plans. MIIT minister vowed his support for TD-SCDMA in December 2008 that TD-SCDMA services and terminals would be procured as many as possible in government agencies. It is doubtful whether domestic technologies could grow stronger by such government preferences (especially in international markets); the success of domestic products and technologies rely more on free market competition. Let's quote a Chinese scholar's take on the auto sector's lesson - Under state protection since China's accession to WTO, China's state-owned auto industry turns out to a failure. In 2001, the WTO allowed China to maintain its extensive protectionist policies for auto industry in exchange for concessions in other areas. Unfortunately, these protective policies did no good, but rather destroyed the protectees. In the following years, the auto SOEs lost motivation to fight the market, and most stooped to be OEMs for foreign auto giants. By comparison, unprotected private Chinese auto firms such as Chery and Geely, grew from small township enterprises to leading domestic auto brands, and are now entering the U.S. market.

USITO Report: Technical Specifications and Testing Methods of Wireless LAN for Mobile Terminals

In April 2009, the Ministry of Industry and Information Technolony (MIIT) issued an internal circular entitled "Technical Specifications and Testing Methods of Wireless LAN
for Mobile Terminals", numbered as YDC 079-2009. The technical requirements are composed of five sub-standards: 1. Technical Specifications and Testing Methods of Wireless LAN for Mobile Terminals; 2. Technical Requirements and Testing Methods of Wireless LAN Stations; 3. Technical Requirements and Testing Methods of Wireless LAN Access Points; 4. Technical Requirements and Testing Methods of Wireless LAN Access Controls; 5. Technical Requirements and Testing Methods of Wireless LAN Authentication Servers.

With the help of a few USITO member companies, we immediately translated the new document. It is worth attention from our broad membership in terms of two aspects: First, according to the document any WLAN mobile terminals must support WAPI, given no testing specs are available for Wi-Fi only products, which are thus unable to go through type approval process and to get any licenses. Second, it could potentially impact trade and go against China's commitment to WTO TBT rules - the new regulation was issued as an industry specific one, all standards identified are not national standards (GB) but industry ones, so they are not subject to WTO notifications. However, the impact on the industry might be huge, since foreign equipment/terminal vendors must readjust their products to support China's WAPI standards if they want to sell in China. In this regard, it could be regarded as mandatory requirement.

That said, we are yet uncertain on the real impact on the U.S. ICT industries. Members please contact us for your concerns. As the document remains an internal one (MIIT has not released it publicly, but made it available to related enterprises including some USITO member companies), if USITO members want a copy of our translation, we have to bother you sending an email to ftzhang@usito.org. It is strictly for member reference only, please do NOT redistribute.

 

Member in the News: MIIT Vice Minister Greets Qualcomm Chairman

On May 19, MIIT Vice Minister Mr. Xi Guohua met with Paul Jacobs, Chairman and CEO of Qualcomm. According to MIIT press release, the two sides exchanged a wide spectrum of views on the global telecom industry development, technology evolvement, Qualcomm's participation in China's 3G development, as well as its cooperation with the Chinese telecom equipment vendors and carriers. Detail

China updates spending details of stimulus fund

China's economic planning body released a breakdown Thursday of how the government's RMB 4 trillion (USD 586 billion) of stimulus funding was being spent. Since the stimulus package was unveiled in November, 230 billion yuan had been used as of the end of April, the National Development and Reform Commission (NDRC) said on its website. NDRC said that RMB 1.18 trillion, or 29% of the total package, was offered by the central government. The remaining fund will be supplied by local governments and the private sector. Detail

Selected Chinese Media Reports

Regulations

Stimulus Plan for Culture To Be Released

The Stimulus Plan for the Culture Industry was drafted and is now in the process of review by the State Council. The Plan is aimed to stimulate the development of culture-related sectors, through measures including the encouragement of ownership reform of state-owned media enterprises such as the publication houses, TV stations, newspapers, etc. The government will also use preferential policies like tax cut to foster the more competitive Chinese culture industry. Chinese Text

3G Mobile Communications

MIIT: China Mobile's Market Share Erodes

In the morning of May 19th, MIIT vice minister Xi Guohua said that China Mobile's market share has declined, and the new mobile carriers China Telecom and Unicom are enjoying a growing share. He said it is in line with the objective of China's telecom industry restructuring: to eliminate monopoly and encourage competition. MIIT statistics show, in the first three months of this year, China Mobile has merely 68% market share in the newly added subscriber base, compared with 93% in 2008. Chinese Text

iPhone Fate in China Unknown Yet

No timetable is yet available for iPhone's official entry into the Chinese market. The major difficulties in the negotiation between Apple and China Unicom include: Apple refuses to disable iPhone's Wi-Fi module; Unicom wants to use its own media player in iPhone, both of which are not acceptable to Apple. Currently there are 1.5 million iPhones in use in the Chinese market, introduced through various illegal channels. In 2008, Nokia sold as many as 71 million mobile phones in China. Chinese Text

China Mobile Spends More on TD Terminal

On May 17, China Mobile announced to ally with nine mobile phone makers and three chip vendors to jointly develop TD-SCDMA mobile phones. According to the agreement, China Mobile will invest RMB 600 million on the joint R&D effort. The money is estimated to bring at least RMB 1.2 billion investment from its allies. MIIT vice minister Lou Qinjian attended the signing ceremony to kick off the alliance, who reiterated the government stance to encourage the TD-SCDMA industry. Chinese Text

China's Telecom Industry Sees Lower Profit Margin

From January to March this year, China's telecom industry generates a total profit of RMB 37.65 billion, declining 18.7% compare with the same period of last year. In terms of the total revenue, the figure is RMB 202.42 billion, growing merely 1.8% y-o-y. MIIT vice miniter Xi Guohua said this is primarily due to price erosion, "which is a good thing for the subscribers". Chinese Text

Software

Kingdee Joins The Open Group

On May 19, Kingdee Software, one of China's top software firms, announced to formally join The Open Group, an international neutral technical organization for standards issue. Kingdee Chairman said to the press that his company will leverage the opportunity to help Chinese enterprises follow international information standards and thus build first-class corporate information strategy structure. Chinese Text

  

Trade and Investment

Domestic TV Sets Dominate the Market

By February this year, the market share of domestic brand plasma TV sets has climbed to as high as 78%, compared with the 22% market share of foreign brands. This is an extraordianry growth, since the market share for domestic brands was merely 50% in May 2008. Analysts say this is primarily because of two reasons: one is the newly launched campaign of "Household Appliances Going to Countryside"; the other is the increased support from Taiwan's flat panel vendors to domestic plasma TV set makers. Chinese Text

Semiconductor

Hynix To Set Up New Packaging Plant in Jiangsu

Hynix Semiconductor, Korea's second largest IC chip maker, announced on May 17 to set up a packaging and testing plant in Wuxi City of Jiangsu Province. The company will work with the Wuxi municipal government to jointly invest RMB 2.4 billion on the new plant. A local official said, thanks to the campaign launched in 2005 to build the "Silicon Taihu"(Taihu Lake is Wuxi's most famous scenic spot), the city now boasts China's largest semiconductor production base with the most advanced technology and capacity. Chinese Text

AMD to Strengthen Rural Market Promotion

An effort to follow China's "Household Appliances Going to Countryside" move, AMD just announced its China rural market strategy. The company plans to work with MIIT and OEM vendors to jointly set up training centers across the country. Within this year, AMD's training certers will cover seven to eight provinces. It has also planned to further cut the prices, and highlight the notion of Green PC through better energy efficiency solution. Chinese Text

China Makes Key Progress in Iron-based Superconductor Research

According to a post in the website of the Ministry of Science and Technology, with the support of the 973 Program and other programs organized by MOST, the University of Science and Technology of China discovered the large isotope effect in iron-based superconductor, which represents key progress in this field. The research findings were published in the magazine Nature on May 7th , 2009. Chinese Text

Internet

Google China Launches Seven New Search Services

On May 21st, Google China announced to launch a new service, branded as "Show Options". It is actually the Chinese version of the same service launched by the company a week ago in the States. The "Show Options" contains seven types of new services, including Time Channel, Magic Compass, etc. Google China president Kaifu Lee expects these services a blockbuster in the Chinese market. Chinese Text

Internet Companies Poised to Focus on 3G Era

With the large scale roll out of China's 3G industries, the country's leading Internet firms are currently adjusting their business structure, in order to catch up with the trend and leverage the opportunities. Some websites, such as youku.com, have launched sub portals for 3G video; others are working with leading mobile phone makers like Nokia and Motorola to embed services into the mobile phones. Chinese Text

USITO selected and translated the news summaries above. If you are interested in learning more details about the above Chinese language links, you are welcome to contact us (wenjie@usito.org) to sponsor the translation of that report.

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