No.385 August 7, 2009
Special Issues  
USITO and CAS Collaborate on CSR Standardization
USITO To Support APEC Summit 2009
 

ISO is to launch the development of an International Standard providing guidelines for corporate social responsibility (CSR), which will be published in 2010 as ISO 26000 and be voluntary to use. USITO in collaboration with its Chinese partner China Association of Standardization (CAS) will work out a joint program to track the development of this important standardization work. Both parties hereby invite USITO/CAS member companies' input on this subject. Detail

Top Story

Post S&ED: ICT Issues for the Imminent China-U.S. JCCT

According to a press release by China¡¯s Ministry of Commerce (MOFCOM) this week, Chinese and U.S. officials have reaped substantial progress in the July 27-28 China-U.S. Strategic and Economic Dialogue (S&ED), and the two sides are now proactively preparing for the next China-US Joint Commission on Commerce and Trade (JCCT) which is scheduled in the Fall. MOFCOM said that in the S&ED both sides have agreed to working for a more open global trade and investment system, and condemned the rising trade protectionism which tends to accompany economic recessions.

One priority for the imminent JCCT remains to be ICT: during the S&ED, the two countries agreed to accelerate the implementation of "Guidelines for China-US High Technology and Strategic Trade Development" and swiftly formulate the Action Plan on Expansion of China-US High Technology and Strategic Trade Cooperation in Priority Sectors. The status may be further reviewed in JCCT.

The U.S. ICT industries were long concerned about non-discriminatory government procurement policies, which was just addressed in S&ED. The two governments have agreed to strengthen their cooperation in order to accelerate China's accession to the WTO Government Procurement Agreement (GPA), which would include China's submission of a report setting out the improvements that China would make in its revised offer. The submission is scheduled to be handed to the WTO Government Procurement Committee at about the same time as the next JCCT.

A key point in the GPA discussion is that China is committed to treating products produced in China by foreign-invested enterprises the same as products produced in China by Chinese enterprises, under its Government Procurement Law. The United States confirmed that products produced in the United States by an enterprise established in the United States will be treated under its procurement regulations as domestic products regardless of the ownership of the enterprise. Xinhuanet.com, 8/5/2009

USITO Notes: The official turnouts from the S&ED could hopefully resolve a long standing doubt of USITO member companies: it is the highest level clarification on what are the "domestic products" - products produced in China, regardless of the ownership of the enterprise, now come to the list. While no legal definition on "domestic products" is available, the post S&ED joint statement may serve as a reference for multinationals' negotiations with the government in the procurement projects. In most Chinese government procurement activities, the preference for "domestic products" has been requested, and according to Ministry of Finance's No.119 Circular, GP projects can not buy "imported products" unless there is "no such products in China", and there is "a necessity for the purchase". The highly biased directive has also led to the widespread misconception that the central government tends to bar all "foreign-brand products", given the lack of a clear definition of what are "domestic products".

Another noteworthy points in the S&ED is, China has agreed to "further decentralize approval authority and streamline approval procedures". Though this term would only apply to the broad "foreign investment" activities, and no details were given, this statement is more than welcome by USITO member companies. We have been perplexed by China's complicated approval process, such as in the telecom field, companies often times need to go through three different authorities and the procedures are generally lengthy. There are signs on the ground that the government is working on a unified process, and begins inviting mutual recognition efforts with foreign stakeholders. USITO welcomes such trend and looks forward to contributing to the discussions.

Bilateral trade volume between the two countries decIined 16.6% in H1 2009 year on year, to USD 132.09 billlion. This figure was impressive, however, compared with the 23.1% drop with Japan, 20.9% with EU, and 23.8% with ASEAN countries. A report by US Chamber early this year said 74% of US enterprises investing in China are making a profit and that 91% plan to expand in China. There are no signs of worsening U.S-China trade relations, but for the ICT industry, the bottleneck is looming because of the policy barriers like "Buy Domestic". MOFCOM spokesman Yao Jian said in a press conference day ago that the cooperation in high-tech products is a major issue in the bilateral trade relations.


Google Sets to Go Head-to-Head with Apple in China

According to a 8/5/2009 article in ft.com, as China Mobile began promoting a range of customised smartphones based on Google's Android operating system (OPhone), Google is poised to garner a bigger share in China's mobile phone market. The launch of the OPhone by China Mobile comes as smaller rival China Unicom is nearing an exclusive agreement with Apple to sell the iPhone in China for three years.

Sources from Lenovo said, the OPhone, the first of China Mobile's 3G smartphones, will be made by Lenovo Mobile, and could be launched as early as next week provided the marketing is ready. China Mobile will also launch a version of HTC's Android-based Magic smartphone simultaneously. Apple once held talks with China Mobile about potential iPhone distribution in the past, but the two could not agree on how to share revenues.

It is said that China Mobile is expected to offer a subsidy of up to RMB 2,000 on the OPhone, almost half the price of the device, to its pre-paid and contract customers. Smartphone penetration in China is running at 10% of all handsets sold, but the devices are expected to generate higher revenues as subscribers access features such as music and games downloads. www.FT.com, 8/5/2009

USITO Notes: China Mobile terminated iPhone discussion in October 2007 over revenue sharing differences, as the company cannot stand any kinds of voice revenue sharing terms whatsoever. With talks with Apple collapsed, China Mobile bet on Google's Android. Two years passed and Android may mature. Despite China Mobile's dominance in the mobile market, prospects for the battle remain unknown, as public awareness on OPhone is so low, plus next month China Unicom may officially come up with a nationwide campaign to celebrate its exclusive iPhone deal for three years. The cult status of iPhone is so unsurmountable that, if offered at a lower price (or Wi-Fi not disabled), the product may storm the new 3G market with large margins ahead of other rival offerings.


Member in the News: HP and Foxconn to build laptop manufacturing hub

USITO member company HP and Foxconn Technology Group have agreed to jointly invest USD 3 billion in laptop manufacturing bases in Chongqing. When completed, the manufacturing hub will consist of two main facilities, which together can produce 20 million laptops for exports each year. The hub is expected to generate an annual output of RMB 200 billion (USD 29.28 billion), about one third of the southwestern municipality's yearly industrial output. Detail

Baidu Now World's Second Search Engine

The Nasdaq-listed Chinese search engine Baidu.com has topped Yahoo! to become the world's second most popular search engine in June, taking 6.9% of the market share, according to a report by the US marketing research company ComScore. Detail

Best Buy to Sell China Unicom's 3G Phones

U.S. electronics retailer Best Buy has announced that it has reached a strategic cooperation with China Unicom to sell the latter's 3G products in its stores in China. These products will include China Unicom's 3G mobile phones, data cards, packages, and 3G Internet services.Detail
Selected Chinese Media Reports
 

Regulations

Energy Efficiency Standard for Color TVs to Be Announced

The proposed energy efficiency standard for flat panel TVs, which has been discussed for two years, is about to come effective. With the implementation of the standard, all existing flat panel TVs in the market shall bear energy efficiency marks since March next year. The standard has gone through technological examination procedures, and will soon be posted publicly, according to Zhang Xin, a senior official from China National Institute of Standardization. Under the standard, three grades are defined for energy efficiency of flat panel televisions, of which Grade 1 is intended to be the target of energy-saving products, while Grade 3 is the grade for market access, intended to eliminate energy-consuming products. Now enterprises will have to dispose those high energy consuming flat panel TVs. Chinese Text

SARFT to Regulate Online TV

Insiders told the media that the State Administration of Radio, Film and Television is considering policies to regulate the fast growing Internet TV market. But the news has not been confirmed by SARFT. Domestic leading vendors, including TCL, Skyworth, Hai¡¯er, Changhong and Hisense, all have introduced online TV, transmitting Internet video to TV terminals via Internet. Currently, online TV sets have become a high profile product. Sources said that SARFT has issued a circular to its branches in some provinces, requiring them to keep an eye and conduct surveys on newly produced online TV sets, for reference for SARFT to enact follow-up policies. Chinese Text

Digital Media

Shanghai to Build Next Generation Pilot Broadcasting Network

On August 1, the Ministry of Science and Technology (MOST) and State Administration of Radio, Film and Television (SARFT) signed an agreement on building China¡¯s next generation broadcasting network with the Municipal Government of Shanghai. This marked the commencement of the deployment period for China¡¯s next generation broadcasting network. NGB is based on digital cable TV and mobile multimedia TV, and incorporates China¡¯s proprietary ¡°high performance broadband information network 3TNet¡± technology. China plans to construct pilot networks in major cities across China in the next 2-3 years, and complete the construction of the next generation broadcasting network in the next 10 years. The next generation broadcasting network will constitute a part of new generation information infrastructures based on 3C convergence. Chinese Text

OMNERC: CBHD to Prevail

Lu Da, Vice Director of the Optical Memory National Engineering Research Center (OMNERC) which is based in TsinghuaUniversity, told the media on August 5 that the competition between China¡¯s proprietary CBHD, China Blue Hi-definition Disk, and the blue-ray disc standard dominated by Sony and Panasonic is expected to conclude by the end of this year. Lu is one of the founders of CBHD. He said in an exclusive interview that the industrialization of CBHD is accelerating in China, and prior to October 1, CBHD, incorporating Chinese proprietary AVS audio and video decoder and DKAA digital rights manager will be mass produced. Currently, Hollywood giant Warner and China Record Corporation are all members of China Hi-definition Disk Alliance. ¡°With CBHD players and disks gaining ground in China, CBHD is expected to prevail against foreign BD in China,¡± Lu said. Chinese Text

China to Implement Proprietary DiiVA

China¡¯s first proprietary DiiVA (Digital Interactive Interface for Video & Audio) has come to the implementation period. Sources said that following the announcement of DiiVA globally in April, representatives from over 100 foreign and domestic enterprises attended the DiiVA user assembly held in Guangzhou in August 4. According to Bai Weimin, Secretary-general of China Video Industry Association, DiiVA, an industry standard thoroughly developed by China¡¯s TV markers, won¡¯t be confined to China. Now, China has lodged an application for approving DiiVA as an international standard. Many foreign giants have acknowledged this standard system due to huge business opportunities in China. Chinese Text

Trade & Investment

Lenovo Reports Net Loss Of USD16.01 Million

Chinese PC maker Lenovo has published its financial report for its first fiscal quarter ended June 30, 2009, and the company states that affected by the weakened PC demand and the decrease of prices of computers, the company made net loss of USD16.01 million during the period. This was the third consecutive quarter for Lenovo to make a loss, but the result was better than the prediction of market analysts, who said the company's loss would reach USD54 million in the first fiscal quarter of 2009. Chinese Text

 

China Launches Silicon Valley in Beijing

A FutureScience & TechnologyCity invested by 13 famed state-owned key enterprises in Beijing is going to be built. This program will take three years. The purpose is to build a state-level high-tech R&D base, according to Zhang Xiwu, Chairman of Shenhua Group. Under the state¡¯s plan, this city will be built into a world-class technological innovation base which shall guide the development trends of the applied science and technologies in China, and where talents on the cutting edge of relevant industry application research fields can start their business. The S&T city was constructed for implementing the government¡¯s plan to introduce 1000 high-level talents from overseas in the next 5-10 years. Chinese Text

3G Mobile Communications

Nokia Urged to Accelerate Efforts on TD Handset

On August 4, Xi Guohua, Vice MIIT Minister, met with Esko Aho, Nokia¡¯s Executive Vice President and Chairman of Nokia China. After inquiring the status of Nokia¡¯s R&D and production for TD-SCDMA handsets, the Vice Minister expressed his hope that Nokia accelerate its R&D efforts and introduce TD handsets as quickly as possible. Local official sources said that Nokia is the only one amongst the top 4 world mobile phone vendors that has not introduced TD handsets. Three months earlier, Nokia President Olli-Pekka Kallasvuo voiced Nokia¡¯s confidence in TD when meeting Chinese Vice Premier Zhang Dejiang in Beijing, and promised to further increase its TD R&D expenditures. According to earlier plans, Nokia would introduce its first TD-SCDMA smart phone by the end of 2009. Chinese Text

Public Bidding Initiated for TD-LTE Terminals for 2010 World Expo

According to a media report, China Mobile¡¯s Shanghai arm has recently launched public bidding for TD-LTE terminals, and raised requirements for shortlist suppliers: first, suppliers should support the development of the TD-LTE industry, especially in terms of terminal and chip R&D; and second, product performance should be advanced and stable to respond to needs for services demonstration and delivery of service during the world expo scheduled in 2010. According to Shanghai Mobile, the TD services will be delivered to the entire venue of 2010 World Expo, which will last 6 months, starting on May 1 and closing on October 31. Chinese Text

Gartner LTE Vendor Rankings: ZTE, Huawei Among Top 3

Gartner published a report titled Scorecard for Vendors for Long Term Evolution Network Infrastructure, which was intended to demonstrate the competitiveness of global LTE vendors. According to the report, Ericsson ranked number one, followed by China¡¯s Huawei and ZTE. LTE vendors are ranked based on scores for seven items including products and service, understanding of market, global distribution of operations and existence capability. Global ten vendors joined this ranking activity. Chinese Text

China Mobile Prepares Mobile Phone App Store

China Mobile will officially launch its mobile phone application online store in mid-August 2009 to encourage development and downloads of mobile phone software in China. The online software store will be operated by China Mobile's data department. Chinese Text

Semiconductor

Zhongguancun LED Alliance Founded

The Zhongguancun Semiconductor Lighting Industry Technology Alliance (Zhongguancun LED Alliance) was proclaimed. According to head of the alliance, the alliance will aim to form a high-end industry cluster, and achieve an industry size of RMB 5b in the next three years. Sources said that the alliance was formed of over 20 organizations including enterprises, research institutes, testing labs and industry associations in semiconductor lighting field. The alliance, since its establishment, will strive to pool resources of the entire industry chain, promote the cooperation between enterprises, universities and research institutes, boost indigenous innovation capabilities, give play to Beijing¡¯s advantages in testing and standards setting, and accelerate the high-end application of large-sized screen display and landscape lighting. Chinese Text

China Telecom Reinitiates Public Bidding for IPTV Terminals

Sources said China Telecom has embarked on a centralized procurement process for IPTV terminals, principally standard-definition IPTV set top boxes. The background for this move is the government published the Electronic Information Industry Adjustment and Rejuvenation Plan this April, urging the construction of next generation Internet and broadband fiber optic access network, and voicing support for IPTV. In Q2 this year, China Telecom launched a testing of IPTV terminals, to prepare for the centralized procurement of IPTV terminals. 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.

DISCLAIMER: The USITO IT Weekly is a free internal publication for the members of the United States Information Technologies Office (USITO) and certain friends of USITO. Subscription is by invitation only. IT Weekly is a publication of USITO which is solely responsible for its content. This publication may be distributed only by explicit permission from USITO. Please reply this email to unsubscribe from the circulation list. If you have any questions on the contents, please send a message to the chief editor of this publication via wenjie@usito.org.