China Plans Domestic Software Quotas 473
October_30th writes "In order to fight the alleged Microsoft monopoly, the Chinese government is establishing quotas for foreign software. While the details are still unclear, the government may require that up to 70% of software on Chinese computers is produced domestically. Regulations like this are, of course, expected to come under fierce criticism from the WTO."
Where is Free Software produced? (Score:2, Interesting)
IANAL ... (Score:2, Interesting)
If this doesn't apply to Free Non-Comercial software, that will be an amazing incentive for people to start using, or at least looking at, GNU.
Excellent News! (Score:5, Interesting)
"I believe the era of exorbitant profit for software should end," said Li, the science ministry's deputy director in charge of new technology. "Basic software services should be cheap, just like water, electricity and gas."
This is great news for Open Source, whose goal is to make software cheap and affordable for everybody. Microsoft has been making exorbitant profits from their products for way too long, and I'm glad that China is embracing the new way of Open Source where software is a basic social right of all citizens.
This move isn't solely in support of Linux, because China wants its own software industry to have a chance to grow and flourish before Microsoft gains total dominance there. Once the Chinese software industry has grown, the largest software companies there can be socialized and given to the People of China.
This is not good in anyway (Score:5, Interesting)
From the article -
China says it is merely trying to level the playing field for its own software companies.
Bah! If every country were to level the "playing fields" - there is no point in such things as patents and WTO laws.
Why does the US still buy Japanese and Chinese products? Maybe the US should "level" the playing fields too. Why does any other country have to respect any other country's patent or trade laws?
As much as I like the fact that this means widespread adoptation of Linux - just remember that they are essentially violating even the basic trade law premises of free and fair trade.
The article's ending makes it worse -
So far, Linux has not made big inroads. IDC software analyst Jenny Jin estimates it has "a very small percentage" of the operating system market, probably less than 4 percent.
I wonder what this means. Homegrown Windows like OS? Whatever it is, this is plain wrong.
While other countries respect trade laws at the expense of their workers, industry and economy, why should China be allowed to be any different?
70%? (Score:5, Interesting)
So how do they plan to calculate the percentage? Number of software packages? Size in megabytes? Lines of source code? Weight of documentation?
Chinese programmers: Please make lots of free, useless little utilities so for every foreign software package your people need, they can install two of yours to balance them.
Copied it from laws for US auto industry. (Score:4, Interesting)
Interestingly, the Japanese did this by opening assembly plants in the US. And employed US auto workers.
The US auto companies had claimed that there was a cultural gap, that the reason US car manufacturing had such a hard time with product quality was the US union auto workers. (Union reps said it was management techniques.)
The Japanese hired UAW members. And got better quality than in Japan. B-)
A friend of mine, a union organizer, put it this way:
"The US auto workers will give you what you ask. If you ask for quantity they'll give you quantity. If you ask for quality they'll give you quality. And if you ask for trouble they'll give you trouble."
B-)
What had ACTUALLY happened is that the Japanese had wholeheartedly adopted a management style promoted by a US theoritician, with major worker involvement and worker-to-management information and idea flow. Meanwhile, spured by the McCarthy-era anti-Communism witch hunts, the US executives eliminated anything that looked socialist or communist ideas from their own workflow, cutting themselves off from information and ideas from their blue-collar workers - who knew the actual processes and factory goings-on the best.
Re:IANAL ... (Score:3, Interesting)
Re:A Crippling Decision... (Score:2, Interesting)
Kind of sounds like the "cancon" [craptastic.com] here in Canada: The Canadian content quota requirement placed on the media to ensure local artists get airtime (as opposed to hearing only American artists).
possible way around it? (Score:3, Interesting)
Re:Nothing 'alleged' about Microsoft's monopoly (Score:3, Interesting)
Ah the WTO (Score:5, Interesting)
Either get the WTO to grow some balls and challenge China or scrap the organization. I am tired of Chinas constant protectionist bs while forcing free trade on other countries. And before the China supporters flame me I know that there overall trade deficit is not that high, but if you take a look at there trade policies(namely demanding technology transfer, and destroying any standards that are foriegn and turning around and forcing companies to use Chinas standards if they want to do business) you can tell that they do not plan to trade with these other nations very long. Trade with China is a very bad idea, maybe once the WTO actually enforces its rules, it might not be so bad, but for the time being it really pisses me off..
Re:In other news... (Score:1, Interesting)
Actually China is losing manufacturing jobs faster than any country on earth. Insufficient investment in infrastructure is making China expensive compared to more developed countries like Mexico.
Wipeout for WIPO (Score:3, Interesting)
Re:possible way around it? (Score:3, Interesting)
[Disclaimer: I've founded and am running a software company developing security-related software in Shanghai.]
In security-related softwares/hardwares, there are requirements that the systems be developed in China. But that does not prevent foreign companies to get thru the backdoor anyways. Consider RSA, Entrust, Verisign, Norton, those firewall vendors,
All they have to do is find someone here (and preferably someone with good relationship) to start an empty shell company, and sell their stuff thru that company. They don't even have to change the name of the product. Those shell companies actually brag about it, because the product is a brand name. This is the usual way for foreign companies that are just water-testing.
ps: No, I don't like any stupid quota, requirements, legislation, and whatever, that restrict any foreign competition.
Possible bad things (Score:5, Interesting)
1 - mass civil disobedience, encouraged by the Chinese government looking the other way: China writes some code, and makes up the slack by pirating everything else. Everyone justifies the piracy by pointing at the government and saying "well, I'm not allowed to BUY it". The rest of the world ends up feeding China's growth but doesn't actually get any money.
2 - GPL black hole: code goes into China but code doesn't come out. What's to stop a desperate Chinese coder from "borrowing" a pile of downloaded source, making a few changes, and selling binaries within China? Nothing. The rest of the world ends up feeding China's growth with free code, and gets nothing in return. The Great Firewall of China might aggravate that even further - maybe insiders *want* to share their code with the rest of the world, but aren't allowed to?
3 - hmm. China's also making custom processors. What's to stop there from being a positive feedback loop here of Chinese code for Chinese chips driving Chinese chip sales in China, which drives Chinese code in China? Nothing - that may even be by design. This'd close off sales of both hardware and software to China even more. Good for China, bad for everyone else.
Like many other posters, though, I don't think China could get away with this, because of the WTO. They'd get hammered not only by the US, but also the EU, India, Japan, and anyone else who makes software that I'm forgetting.
Re:Quotas are generally a bad idea... (Score:4, Interesting)
One example documented in Michael Pollan's book The Botany of Desire [amazon.com] is the U. S. marijuana industry. U. S. grown pot used to be of rather poor quality. Law enforcement cut off the supply from foreign competators. Under this unintentional protectionist program, U. S. grown pot became some of the best in the world.
Alternatives to the Microsoft desktop will reach critical mass a lot faster with some protectionism. Short term, the people in the Chinese goverment will be using software they find unfamiliar, and a little harder to configure, and perhaps a bit awkward to use. But this shall pass. They are obviously willing to take short term hit to come out ahead in the long run.
No, no, no!!! MOD PARENT DOWN (Score:1, Interesting)
China produces anything it can with cheap labor, not just textile and cheap toys.
Many electronics manufacturers assemble products there, and even IBM recently began outsourcing actual software programmers to China.
China just doesn't want Microsoft dictating licensing pricing or feature specs. Anyways, why would China want its thriving economy to purchase licenses from the USA and send all its wealth back to the US? They already buy enough of our debt! What do you think keeps up our great lust for a trade deficit?
If anything, this will spur greater interest in software development of both operating systems and applications by the Chinese for the China.
Re:Uh, NO. (Score:2, Interesting)
This is the world of "market forces" that the average person in a rich western nation lives in. As a "consumer" you chose between two products that are essentially similar and purchase the one that's made better/cheaper.
This sort of limited version of economics has nothing to do with assymetrical trade between unequal participants such as, oh, say, the US and Mexico or India.
Perhaps one needs to spend some time living in a poor section of India or Mexico to understand how even a fairly trivial amount of importing can completely devestate a local economy that could otherwise be happily selfsustaining.
KFG
Re:Communism + Outside Monopoly = (Score:2, Interesting)
Same as 1970s Steel Produce (Score:4, Interesting)
Re:Uh, NO. (Score:5, Interesting)
A though experiment illustrates this. Take the case of a single pair of shoes worth 50 dollars. If the shoes are exported, the nation loses one pair of shoes, but gains 50 dollars. If it imports the shoes, it gains one pair of shoes, but loses 50 dollars. Whether a nation imports or exports shoes depends on how much it values a pair of shoes over 50 dollars.
Currencies are goods as well, but they are goods all too often ignored by the politicians and media. They are a particularly useful good, in that they are the best good suited for buying foreign goods. If the US (as an example) imports more than it exports, then the other nations are going to have a surplus of US dollars usable only in the US (or the currency markets). Currency fluctuations lead to this kind of imbalance. If you see a trade imbalance, take a look around and you'll probably also see a recent fluctuation in currency values.
There are other causes to a trade imbalance symptom, however. The point is, the trade balance in an of itself is not a problem. At most it's a symptom of another problem.
Re:Ah the WTO (Score:5, Interesting)
Re:In other news... (Score:2, Interesting)
And if you don't think an increase of $0.25 is a big increase just ask a grocery store, who make pennies per profit on each sale, even on higher priced items.
An aside: Milton Friedman was one of the heavest proponents of laissez-faire economics. You have left this quote out of its context. Friedman and Smith were very aware of greed and profit, which is one of the reasons the free market performs so well. Henry Ford, and Sam Walton didn't get reach by gouging their consumers, but by charging as little as possible. Only when these companies ask the government for 'protection' does the greed really become damaging to consumers
Let's Get Real Here (Score:2, Interesting)
Re:In other news... (Score:5, Interesting)
I think America dislikes Cuba a lot more than China because there was a lot of American investment in Cuba when Batista was dictator and Castro nationalized, i.e. stole, that capital. It's a matter of revenge. We can't have foreign countries stealing our investments, ya know? And Cuba was setting itself up as an example, so we went and made an example of it. That, and a lot of the folks in Florida are from the former Cuban upper class and they hate Castro and they're very politically active.
Re: Protection CAN BE Good (Score:3, Interesting)
The best example is my highschool, which had an idiot coach who reserved the tennis courts four and half of the five days to the Varsity team players, giving only 2 hours for JV players, many of whom had never played tennis before.
The end result was that our varsity team improved dramatically, but our JV team was as bad at the end of the year as the start. What did this mean? Kids like me and a *select* few others with parents willing to pay for lessons were able to practice and get into varsity. Those without the money continued in JV and never made varsity. This resulted in our varsity team winning LESS than our varsity team of years past, because we were filled with the affluent JV players and not the talented-yet-latent JV players.
This ties in wonderfully well into economics. Those who have parents/foundations/communities etc. which let them *practice* are the ones who will succeed in a capitalistic, hyper-aggressive, winner-takes-all society (just watch our Reality Shows where all but the best leave in humilation and with $0).
China realizes that the average chinese family cannot compete with "Varsity" teams and is letting their "JV" teams have court time, in the hope that they will one day become "Varsity." Kudos to the brilliant PRC! However, I really wish I could post more kudos to
This is not to say let -everyone- have equal time. Oh, not at all! Just let the JV have *some more* time than currently given. Dedicate resources to ANALYZE them, spot the rapid achievers, and send them up to the next grade where they're given some more resources. Let the dedicated resources mitigate the leverage affluence provides to the few.
Please note, there's the even simpler matter of Dominos selling pizzas at $3.50 to kill competition in my homecity, locals unable to sell below $6, only to price it up to $22 once colonizing the area. Pizza Hut moved in and the "added competition" has reduced the price to $20. Yay... duopolies..
Side-rant: I wish schools would teach kids who flunk classes Civics instead of that class again.. I rather they graduate knowing how to be a member of a democracy than memorize the A B B C E D A answers to the final they're retaking for the 5th time. The only Civics anyone learns these days is from Rap which teaches the alternative to the status quo is drugs and promiscuity or from advertisement which teaches you should revitalize your hair by giving patron to status-quo brands X, Y and Z. I doubt drugs, promiscuity, or giving patron to brands will improve our Civics.
Re:In other news... (Score:5, Interesting)
My god... I can't believe you lived in China and you call what you saw Fascism.
The profound changes you saw in China iwhere I live as an expat, btw) are the effects of rampant Capitalism, not Fascism. The classes divide, the poor are insanely poor, and the rich drive around in Ferraris. Freedom of speech spreads, free entrepreneurship takes root, and people turn from the collectivity to think for themselves.
Take a hard look at America, and you'll see it's not Fascism that the Chinese are emulating.
The Continents (Score:3, Interesting)
Actually, that's not quite right either.
See this as reference [wikipedia.org], there is more than one way to divide up the continents.
Your way, with both North and South Americas, isn't listen there, but it's usually used when one talks of political/social divisions instead of geographical, IIRC.
Re:In other news... (Score:4, Interesting)
According to the WTO Agreement governing trade in Textiles and Clothing [wto.org] must be made subject to GATT disciplines until Jan 1, 2005, at the latest. That is, all textile import quotas that were legal unter the 1973 Multifibre Agreement must be abolished, and WTO Members must afford textile imports full most-favoured-nation treatment (i.e. you can't discriminate between imports of different countries any more) and national treatment (i.e. you can't treat imported textiles less favourable than those of national origin, such as by taxing them higher).
This was the principal concession made to developing countries during the Uruguay Round that gave birth to the WTO, liberalizing the clothing sector where developing countries tend to have the competitive advantage. This caused them to accept other WTO packages such as GATS [wto.org], TRIPs [wto.org] and TRIMs [wto.org], liberalizing areas where developed counties tend to have competitive advantages. (Never mind that the EU and US in particular have since resorted to all kind of dirty tricks to delay and circumvene the liberalizing provisions of the Agreement on Textiles and Clothing...)
However, the US-PRC situation is peculiar: As a condition to agreeing to China's WTO accession - which had to be OK'd, as everything in the WTO, by consensus of all Members - the PRC Accession Protocol provides that the U.S. may legally maintain import quotas on Chinese clothing up to 2009. After that, China can sue the US in the WTO Dispute Settlement Body (a kind of World Trade Court system) if quotas are maintained.
As to the Chinese software quota, this seems to be a clear-cut violation of the WTO Agreement on Government Procurement [wto.org], in particular Article III [wto.org] thereof. It's possible, though, that the Chinese may invoke exceptions, such as the security exception of Article XXIII [wto.org]. The same provision was, incidentally, used (or abused, IMHO) by the U.S. to deny Iraq reconstruction contracts to the countries opposed to the war. At any rate, given the interests at stake, expect legal action by the U.S. soonest if this measure is not abolished immediately.
Re:Hmm -- where do Linux and *BSD fit? (Score:2, Interesting)
Anybody who sees the problem Microsoft faces with piracy in China would have to be out of their mind to pretend the Chinese will respect anybody else's IP laws. Particularly anything as unenforcable as the GPL.
Re:Ah the WTO (Score:4, Interesting)
More to the point, though, the WTO legal system is not effective enough: countries that win a WTO case gain the right to "withdraw concessions", that is, to retaliate with protectionism of their own against the losing party. This is supposed to dissuade would-be offenders from violating the agreements in the first place. However, if a small country such as, say, Cuba, wins in a WTO court against the USA, the volume of retaliatory action Cuba can take is so small compared to U.S. overall trade streams that U.S. exporters won't notice at all.
Past cases show that only the Big Three (USA, EU and Japan) have the economic clout to actually force other countries into WTO compliance. This has been demonstrated in the US-Steel case, where President Bush was forced to abolish illegal steel tariffs in order to avoid EU retaliation against products from U.S. states Bush needs to win in the presidential elections.
To Compile Open Source = Produce? (Score:2, Interesting)
A few tweaks in an Open-Source piece and a simple re-compile may be all that's needed to qualify as "Made In China".
WTO needs to be disbanded (Score:3, Interesting)
The WTO is running around acting like a sovereign nation, dictating what the entire world must do, at the least common denominator.
China is a independent nation, they shouldn't bend over due some 'committee'.
Re:In other news... (Score:3, Interesting)
1. Workers should be paid more and have better conditions because then they are more efficient - I'm going to take the role of a greedy Nike executive here. If I can make more money by investing in better conditions, which would increase efficiency, and increase output, then I most certainly will do it. Look how profitable it is! A great catharsis for my greedy whims! In short, while your claim is sound, the investment in better conditions is probably not offset by the increase in worker output, otherwise these companies would employ such a tactic. Now this leads me to the next point, "why don't they just pay them more regardless?"
2. Corporations make 800% profit margins and can afford to dip into those margins to satisfy worker needs - First off, Nike doesn't make this kind of profit on their products. If you look at their annual report, they generated $10 billion in sales, but the just the goods themselves cost $6 billion to make. Adminstrative expenses, such as marketing, made up 3 billion dollars. And after income taxes, they are left with $500 million. This is a return on investment of 5%. Not the kind of corporate-dreamland-800% that you claim. And surely even a paltry increase in the worker-wages would be significant. Even paying 1 million workers $100 more a year more will put a large dent into their earnings. The best thing Nike can do is offer a workplace over and above the local standard, which indeed they do.
Fortunately even if they try to bump up the price of their goods, Wal-mart is the great equalizer. For years retailers have put up with 'high' profit margins of their suppliers, but no longer. Commpanies like Levis are getting trumped by bargain-brand competetitors that don't have the atrocious profit-margins that Levis enjoys. All thanks to competetion from companies like Wal-mart.
More on the aside: Well like I said, it's this constant 'greed' that actually makes us better off. When competetitors get destroyed, that is usually a good thing. The inefficiencies of that competetitor have been eliminated in a pure, darwinistic fashion. But just because competetitors don't exist, doesn't mean competetiton doesn't exist either. As soon as that company tries to increase their prices, another competetitor rises up to get a piece of that pie. This is why anti-dumping tariffs are so misguided.
And mergers don't necessarily mean greater control or profits. AOL-Time-Warner had the greatest single earnings loss in the history of civilization.
True, but still completely unethical. (Score:3, Interesting)