No.392 September 25, 2009
Special Issues  
USITO Outreach Program: NDRC IPR Project Final Briefing
USITO Monthly Policy Call, 9/30/2009 Member Only
 

On Sept.25, USITO attended the Project Briefing event hosted by Peking University (PKU) for the "Innovation and IPR Ecosystems" project, which is conducted by the PKU team for the National Development and Research Commision (NDRC) and sponsored by six USITO member companies: CISCO, Intel, Microsoft, Motorola, RIM, and Symantec. Officials present included NDRC, MIIT, State IP Office, etc. More details will be posted to USITO website soon.

Top Story

PC Sales Surge in Rural Area, Foreign Vendors Left Behind

According to an August report in people.com.cn (link of source), Chinese government campaign on "Computers Going To Countryside" has reaped great harvest: within the 3.5 months' promotion (starting in March 2009), over 110,000 computers were sold to the Chinese rural areas as of 6/30/2009, with the total revenue reaching RMB 366 million (USD 53.8 mln).

Most of the PCs under the program were sold to relatively developed provinces: nine provinces in the top ten best selling areas are located in the east coast, with the top three being Shandong, Hebei and Henan. Western provinces saw slack sales, such as only two computers were delivered in Tinghai Province during the 3.5-month period. Official sources said the slackness was because of the poor infrastructure in the western areas, like the delivery system and communication networks.

Most encouraging to domestic PC companies, the report says, is that the domestic vendors have successfully garnered the lion share of the rural market. Four domestic companies, namely Lenovo, Haier, Founder, and Tongfang, have taken up a total of 97% share of the total market. Foreign-brand computers in combination got merely 1% share of the market.

A 9/14/2009 China Daily report states that the government's rural PC promotion program may lead to 1.5 million new PC shipments within 2009. Though the figure is a fraction of the average yearly shipment of around 40 million in China, the program will greatly help boost the country's sluggish PC market. Members please click here for more details.

USITO Notes: Among the 1.3 billion or so Chinese population, nearly 60% live in rural areas. Since most of the rural families do not have a computer, the market could be a greatly potential one to tap. CCID (China's top ICT research firm) sources said, though China is the world's second largest PC market, from the late half of 2008 this market saw clear signs of shrinking due to the impact of financial crisis, which forced consumers and companies cut their IT spending. As an effort to combating the turndown and stimulating domestic demand, the central authorities of China in March this year began promoting PC sales to China's vast countryside.

World leading PC makers have been reluctant to focus on China's rural market, which is one of the reasons that foreign brand PCs took merely 1% of the rural market share. Profit margins out of the rural PC shipments are much lower, due to the capped procurement prices set by the government. Moreover, multinational PC vendors generally pay high attention to their service networks, which would incur great costs for building such networks across China's vast hinterland. Distribution channels in the rural areas will be another challenge, given that foreign firms' existing channels are mostly in China's coastal areas.

China's Commerce Ministry pitched in its website that rural PC shipments will account for at least 40% of the total within the next three years, so the market is by no means negligible for foreign players. There are signs that multinationals have become more committed to the hinterland, sources from Gartner said that leading global PC vendors are now busy laying out distribution channels across the country. According to a Sina.com report, HP has initiated a training program to educate rural consumers basic computer knowledge, and to date the program has reached 50,000 plus rural residents.


Beijing's 51 Indigenous Innovation Products Catalogue

At the 4th signing ceremony for government procurement of indigenous innovation products made in Zhongguancun Science & Technology Zone, officials from Beijing Municipal Science & Technology Commission said that the list of first batch of Chinese indigenous innovation products has been formulated by China's central authorities. Among the list include 51 products from Beijing, accounting for 21% of total and ranking No.1 out of all provinces. According to Zheng Jichun, Vice Chairman of the Commission, a total of 243 products are accredited as state-level indigenous innovation products, such as Dawning Tianchao high performance computer, the the Mobao series handwriting tool, etc. The products in the list embodies the most advanced technologies in China, according to Mr. Zheng. For instance, the Mobao tool developed by Hangwang Technology incorporates multiple domestic and foreign cutting-edge core technologies and has successfully solved the difficulty in input of a mixture of Chinese characters, English letters, numbers and symbols within an operating interface. Source: Beijing Daily website, August 2009


USITO Notes: USITO reported in its 8/28/2009 newsletter issue (link) about China's first Indigenous Innovation Products Catalogue, which was developed by the Ministry of Science and Technology in June and contains 243 homemade products. From a number of sources we have got the final list for the 51 products made in Beijing, though we are yet to obtain the full catalogue for the 243 products. Members please click here for the Beijing list and more details.

 

Knowing the existence of the Indigenous Innovation Products Catalogue, USITO has been approaching the Ministry of Science and Technology with questions like the rationality of the catalogue and details for those products. We have got initial feedbacks from the ministry, and the two sides are now discussing appropriate channels for a dialogue about the issue. Members are welcome to contact us for more details or any insights you may have.

 


Chinese Mobile Phones Finally Enjoy One-Way Charge

On 9/23/2009 China Telecom announced that it will adopt one-way charge policy for its mobile phone users since October 2009. This makes the company the first Chinese carrier to introduce one-way charge policy for mobile phone users. Experts believe this will spark the wide spread introduction of this charging method and signal the beginning of the one-way charging era in China.

In their responses to media, the two other Chinese mobile carriers said they will soon adopt the same policy. To date over 700 million mobile users in China are charged for both receiving and making calls.

China Telecom sources said the company plans to sell 70 new 3G phones since October 1st, all of which will cost less than RMB 1,000 each. Detail

Member in the News: China mobile search: the next battle for Google, Baidu

As China ushers in a new generation of snazzy smartphones and 3G networks, Google and Baidu are shifting their battle from the Internet to China's mobile search market, likely to become the world's largest. Detail

Selected Chinese Media Reports
 

Regulations

MOC Releases Internet Caf¨¦Rules

The Ministry of Culture published the Administrative Measures for the Accreditation of Netbar Chain Enterprises. The Measures stipulate that ¡°the responsible departments at various levels, when working out overall plan for total number of netbars, shall give priority consideration to the formation of netbar chain enterprises¡°, and that ¡°Netbar chain enterprises are encouraged to merge, and acquire all or controlling stakes of, single netbars, and the responsible departments at various levels shall streamline the modification procedures of Licenses for Operation of Internet Services ¡±. A netbar chain enterprise is clearly defined in the Measures. Insiders comment that the purpose of this rule is to encourage the development of netbar chain enterprises, and phase out single netbars. Chinese Text

SARFT to Close Illegal Video Websites

On Sept. 21, the State Administration of Radio, Film and Television posted a circular concerning the administration of Internet audio-visual program service permits on its official website. According to the circular, starting from March 1, 2010, departments in charge of radio, film and TV at various levels shall, in line with the Provisions on Management of Internet Audio-Visual Program Service, inspect relevant video websites in the place of respective jurisdiction for compliance with the license rules, and shall impose punishment upon those websites operating without licenses. In case websites operates illegally for more than 3 months, they should be closed. The circular was published on Sept. 15. Chinese Text

Trade & Investment

China Appeals WTO Ruling on Publications

On Sept. 22, China lodged an appeal against a World Trade Organization panel ruling regarding China-U.S. dispute over publications market access, and expressed its hope that this case will be heard by the appellate agency fairly and impartially. After China¡¯s appeal, a 7-member appellate agency will reinvestigate the case in the next 2-3 years, and the agency can uphold, modify or reverse the previous panel ruling. The United States brought the case to the global trade watchdog in April, 2007, saying that China¡¯s regulations on the import and distribution of books, films and audio-visual products are violating the world trade rules. The ruling report released by the WTO panel largely upheld the U.S. allegations. China¡¯s Ministry of Commerce had expressed regret over the panel ruling, saying that "China has always fulfilled its obligations on market access for publications and the channels for foreign publications, films and audio-visual products entering Chinese market are extremely open." Chinese Text

China to Push IT Application in SMEs

The 6th China International Small and Medium-Sized Enterprises Expo was held on Sept. 22. At the SME IT Application Summit Forum held on the same day, officials from the Ministry of Industry and Information Technology said China will increase its efforts to accelerate the IT application in SMEs, and make China one of the leading nations in SME IT application. According to the plan, by 2012, over 90% of SMEs should be able to announce and acquire information via Internet, over 40% of SMEs should be able to utilize IT for production, management and innovation, and over 30% of SMEs should be able to depend upon E-commerce platform to purchase goods and sell products. Telecom carriers promised they will share IT results with more SMEs to achieve win-win situation for both sides. To respond to global financial crisis and accelerate the upgrading of Chinese SMEs, the State Council released on Sept. 22 Several Guidelines for Further Promoting the Development of Small and Medium Enterprises, calling for accelerating the IT application efforts in SMEs. Chinese Text

3G Mobile Communications

Lenovo Mobile Launches First 3G OPhone

On September 16, Lenovo Mobile Communications announced to launch the first OPhone system based mobile phone, which will support China Mobile's TD-SCDMA services. According to a BDA analyst, sales of the product will largely depend on the quality of the mobile carrier's 3G network, since it will heavily impact users' experience. It is said China Mobile is now intensely promoting its OPhone mobile phones, since its rival China Unicom has just inked an exclusive contract with Apple Inc., and will soon start selling iPhones in China. Chinese Text

China Mobile Plans to Push Mobile Reading Services

On Sept. 23, China Mobile announced its plan to invest RMB 500m to build a mobile reading base in Zhejiang in the next 5 years. Sources from the base said that the mobile reading service, free to users currently, is being popularized in Zhejiang, and China Mobile subscribers have free access to all the books on the reading platform. China Mobile decided to construct a mobile reading base in Zhejiang at the end of 2008, and in March 2009, China Mobile announced the launch of this base, which was intended to pool all the content resources to propel the development and application of G3 electronic readers. China Mobile held a mobile reading summit forum in Hangzhou on Sept. 23, and at this forum, China Mobile signed deals with 10 content providers. Chinese Text

Semiconductor

Sensor Network Standards Working Group Established

With the approval of the Standardization Administration of China, China National Information Technology Standardization Technical Committee formed a sensor network standards working group. The creation of the working group will effectively address the interface of technical standards and platform, a bottleneck which has long been hindering the development of Internet of Things, and promote the application of sensor networks in various industries. From a long term point of view, the sensor network standards will advance the development of Internet-of-Things services. Sources told the media that the working group is formed with representatives from ChineseAcademy of Sciences and China Mobile, which are all major research and application organizations in sensor network field. ¡°The working group will, through working on standardization, promote the development and dissemination of sensor network technology, and push the application of sensor networks in various industries to cultivate new sources of economic growth,¡± according to executives of the Group. Chinese Text

Expert: China Able to Develop Supercomputer

Jin Yilian, member of Chinese Academy of Engineering and Director of National Research Center of Parallel Computer Engineering & Technology said on Sept. 21 that China has full capability to complete the research and manufacture of supercomputers with an operation speed of 1000 trillion times per second incorporating domestic CPU. Jin made the remarks at a symposium on China¡¯s 60-years engineering achievements held by ChineseAcademy of Sciences. He said thanks to years¡¯ efforts, China has made great advances in R&D of domestic CPU chips and application of supercomputers, and acquired capability to manufacture supercomputers of 100 trillion times per second using domestic CPU. China¡¯s high performance computers including Galaxy and Dawning have achieved remarkable results. China¡¯s first supercomputer was developed in 1983, and recorded an operation speed of 100m times every second. Chinese Text

Largest Sensitive Component Base Kicks Off

China¡¯s largest sensitive component manufacturing base --- XiaoganElectronicsIndustryPark started operation on Sept. 22. Huagong Tech is the sole investor of this hi-tech industry development zone. The base¡¯s annual output value is expected to hit RMB500m for phase I, and RMB1b upon completion of phase II. Insiders said temperature sensors can be widely used in household appliances and autos, and enjoy high prospects. According to Huagong Tech, inadequate production capacity of sensitive components has long been hindering the development of enterprises, and with the operation of the XiaoganS&TPark, this problem has been thoroughly solved. Chinese Text

Software

2008 Software Outsourcing Income Grows by Half

Statistics released at the 2009 China Software and Service Outsourcing Summit Forum held in Nanhai show that China achieved software service outsourcing exports of USD1.59b in 2008, up 54.3% over 2007, much higher than the growth of other software services. In 2009, this number continues to grow, and Guangdong¡¯s industry clusters contribute much more to the growth. Chen Chong, Chairman of China Software Industry Association, believes two reasons can explain the rapid growth. First, the outbreak of the financial crisis is accelerating the outbound transfer of software and information service outsourcing industries from developed countries and advanced regions, and many multinationals are willing to move R&D and data processing to the River Pear Delta in China; and the other reason is the inherent driving force of the River Pearl Delta as a result of ongoing upgrading of the manufacturing industry and emerging industries such as auto, petrochemical, electronic information and biopharmaceutical. Chinese Text

Taiwan Calls for Joint Work on Large Application System

Liu Ruirong, Chairman of Taiwan-based Information Service Industry of China, said that software industries in Chinese mainland and Taiwan can work together on R&D of large-sized application systems for obtaining more international outsourcing deals. At the 2009 Workshop on Taiwan-Chongqing Industry Development Strategies held in Taibei, Mr. Liu proposes three guidelines for the cooperation of cross-straits software industries, and they are: more outsourcing deals, focus on professional fields, and R&D of large-sized software or application systems. 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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