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Microsoft Software

China Plans Domestic Software Quotas 473

Posted by michael
from the self-defense dept.
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."
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China Plans Domestic Software Quotas

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  • by blackwizard (62282) on Saturday February 28, 2004 @09:55PM (#8419953)
    In order to fight the alleged monopoly on Chinese clothing in America, the United States government is establishing quotas for foreign clothing. While the details are still unclear, the government may require that up to 70% of clothing worn by North Americans be produced domestically. Regulations like this are, of course, expected to come under fierce criticism from the WTO.
    • by Da Fokka (94074)
      Not being able to use sweatshops as much would greatly reduce the profit for companies that sell clothing :)
      • by Killswitch1968 (735908) on Saturday February 28, 2004 @10:03PM (#8420009)
        This is a bullshit argument.

        You really have to put yourself into a Chinese man's shoes to understand. If a company goes overseas and offers you a job that pays $0.70/h, 12 hours a day, in a tiny little hot room, there's no way you would do it, right?
        Not necessarily. Getting $0.70/h may be a blessing if the alternative is making $0.40/h for a domestic company, or more likely not working at all. We can only assume that because this Chinese man freely accepts the job that no other better alternatives exist. To remove this job opportunity for him may make us feel morally superior, but it won't help him put food on the table.
        • Quite often on UK television, a reporter will say "these coffee pickers earn only 1 dollar a day", with no reference to how much 1 dollar buys you in that country.

          I'm not saying that standards of living aren't lower, and yes, I'm glad I live in the UK and not Kenya, but perspective is required.

        • by gaijin99 (143693) on Saturday February 28, 2004 @11:48PM (#8420501) Journal
          We can only assume that because this Chinese man freely accepts the job that no other better alternatives exist. To remove this job opportunity for him may make us feel morally superior, but it won't help him put food on the table.
          Because China is a communist dictatorship I think its safe to assume that no one in China is doing anything freely. They've relaxed away from "true" communism (whatever that is), but the government of the PRC is still one of the nastier dictatorships around. I personally find the US government's attitude towards Cuba darkly humorous. Fidel is a nasty little dictator, no doubt, but you can't tell me that somehow he's worse than Wen Jiabao (Premier of the PRC). Cuba exists as a communist whipping boy so the various Senators and Congressmen can feel virtuious and anti-Communist, then cut fantastic trade deals with China.

          At any rate, the economics of sweat shops don't make sense. In the US the typical garment worker earns around $.25 per T-Shirt manufactured. That means we could double that person's salary by increasing the cost per T-Shirt by another $.25. Somehow I don't think that an extra quarter per T-Shirt is going to be a crippling economic disadvantage to you and me. Hell, we could double your example Chinese worker's salary at a cost of much less than $.25 per T-Shirt. How would this be a bad thing?

          My point here is that there is no real economic reason for garment workers to be so economicly screwed. For those who are interested, here in the US a company called SweatX is producing quite nice clothing at prices comparable (maybe $.25 more per item) to other manufactureres. Look at their website here: SweatX [sweatx.net]

          • Re:In other news... (Score:5, Interesting)

            by PsiPsiStar (95676) on Sunday February 29, 2004 @01:24AM (#8420950)
            Yeah, I just got back from teaching in China. It's a lot closer to Fascism than Communism right now. People are separating into classes, and the notion seems to be 'exploit labor to accumulate capital so that we can buy machines and weapons, and so the political brass can get their BMWs.'

            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:In other news... (Score:5, Interesting)

              by Enoch Root (57473) on Sunday February 29, 2004 @01:58AM (#8421074)
              Yeah, I just got back from teaching in China. It's a lot closer to Fascism than Communism right now. People are separating into classes, and the notion seems to be 'exploit labor to accumulate capital so that we can buy machines and weapons, and so the political brass can get their BMWs.'

              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.
          • Re:In other news... (Score:4, Informative)

            by de la mettrie (27199) on Sunday February 29, 2004 @04:56AM (#8421549)
            Hell, we could double your example Chinese worker's salary at a cost of much less than $.25 per T-Shirt. How would this be a bad thing? My point here is that there is no real economic reason for garment workers to be so economicly screwed.

            You are engaging in wishful-thinking-economics. Since one white cotton T-shirt can basically be substituted for any other white cotton T-shirt, the T-Shirt market is extremely elastic, that is, suppliers that can provide a shipload of T-shirts for just $10 less than their competitor will get the contract from the supermarket chain, no matter whether or not the individual customer would have been ready to pay $0.25 more or not. If the supermarket chain would indeed add, as a bonus, $0.25 per shirt to benefit the labourers, it would quickly be outperformed by other, not-so-generous supermarket chains, retail margins being extremely low as they are. Suppliers would, as well, underbid each other by approximately $0.25/shirt to get the contract that is now worth $0.25/shirt more to them.

            This is called "market economy". Its mechanics have been well understood ever since Smith and Riccardo, and there is indeed a rational reason why trade flows are what they are. To change the equilibrium result, e.g. to raise Chinese worker's salaries, some form of government intervention would be required, which by definition would destroy some measure of wealth by disrupting the equilibrium.

            Consider, though, that every single Chinese worker works at $0.25/shirt not because the State forces her to (China is now capitalist in all but name), but because she considers herself better off in that position than in any other (e.g. unemployed, other job). If any social engineering remains to be done, then, it's up to the Chinese government to institute it (e.g. with minimum wage laws), and not the U.S. or European taxpayer.
        • That may be true, but it's still wrong. It is morally wrong to pay workers in another country ANY amount of money and then take the profits and products they produce elsewhere. Free trade agreements that screw domestic workers out of their jobs aren't evil for that reason alone -- they're evil because they steal from the economy of other countries. Products and profits belong in a worker's community, not in another country!
    • by fermion (181285) on Saturday February 28, 2004 @10:35PM (#8420198) Homepage Journal
      The monopoly is not alleged. In the US the monopoly has been proven in the court of law. This means that those that respect law and order, and those that use law and order to justify other actions, must take the definition as proven and not alleged. Whether it is a monopoly by other definitions is open to discussion, but alleged is typically used only with respect to an entity that has not have the full process of law, i.e. alleged draft dodger.

      If the Chinese were doing something illegal wrt to clothing, the most likely of which would be dumping products in US markets, then the US would likely appeal to the appropriate trade organization and ask the practice to stop. This might result in tariffs placed on China and theoretically increase sales of US domestic products in that category.

      The interesting thing is that MS claims it is not a monopoly, and the prices it charges are determined by a competitive market and are generally the cheapest it can sell the products for and still make a profit. If we accept this as fact, and look at the deep discounts offered to in certain US and non-US markets, it appears that in fact MS is dumping product, a practice that is defined as unacceptable under many treatise.

      We therefore have a situation in which MS is a monopoly and charges arbitrary prices not controlled by the free market, or it is the habit of dumping product onto certain markets, with the assumed intention of destroying competition. In either case, the action warrants defensive measures to protect those markets.

    • oh really (Score:5, Informative)

      by segment (695309) <<gro.xirtilop> <ta> <lis>> on Saturday February 28, 2004 @10:41PM (#8420236) Homepage Journal
      No company in the United States would truly want to do that because they wouldn't be able to compete with the pricing. So what they would do is buy from a chinese sweatshop and have them relabel the tags with "Made in America" ones.

      Wal-Mart and Sweatshops

      Many Americans believe the clothing purchased in U.S. Wal-Mart stores is manufactured in America. In fact, the majority of its private label clothing is manufactured in at least 48 countries around the world, but not in the U.S.

      In his autobiography, Made in America: My Story founding Wal-Mart President, Sam Walton, proselytized "Buy American." USA Today, August 14, 2001, reported that, "Wal-Mart has more than 1,107 international operations." The newspaper also reports that, "Bangladesh workers earn as little as nine cents an hour making shirts for Wal-Mart.

      Hypocritically, Wal-Mart ran a "Buy American" and "Buy Mexican" marketing campaigns simultaneously, all the while reinvesting its all-American dollars overseas.

      Wal-Mart is the largest importer of Chinese goods. 10% of all Chinese imports are imported by Wal-Mart. Wal-Mart even established its own global procurement division this year, abandoning the pretense to its traditional "buy American" campaign. This team searches the globe for the cheapest raw materials, manufacturers and shipping routes. They allow Wal-Mart to relocate factories from one country to the next in its endless quest to squeeze countries for lower wages and cheaper goods. (LA Times 12/03) (source [ufcw.org])

      It may all look good on paper, but this is nothing short of typical politics: "You pressure us, we pressure you" and with an economy like China which is still immature, someone is going to bend, and I don't think it would be China
    • I would like to serious challenge the neutrality of the article.

      It sounds like the Chinese government is going to ban most of the foreign software. But, all the facts quoted by the articles only indicates the Chinese wants more Linux in government desktops.... It is *not* a violation of WTO. Just like US government can say it wants a bigger share of MS/linux/BSD/Macs for the government desktop due to security/stability/easy-to-use or whatever. In any case, Linux is more like an "international" product.
    • Re:In other news... (Score:4, Interesting)

      by de la mettrie (27199) on Sunday February 29, 2004 @04:19AM (#8421476)
      Here's a backgrounder on the pertinent trade law on clothing and software (I don't believe it: something on Slashdot that falls into my area of competence!):

      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.
  • Heh. (Score:3, Funny)

    by Freston Youseff (628628) on Saturday February 28, 2004 @09:56PM (#8419954) Homepage Journal
    Bloody brilliant. Maybe the state banks will be able to pick up the slack on this one. Probably not.
  • Alleged? (Score:3, Funny)

    by Flingles (698457) on Saturday February 28, 2004 @09:57PM (#8419958) Journal
    In order to fight the alleged Microsoft monopoly

    Maybe they should make some alleged quotas if it's only an alleged monopoly?
  • Silly china (Score:2, Insightful)

    by anphilip (737117)
    Silly China, when will they learn that protectionist trade barriers cause depressions
    • Re:Silly china (Score:3, Insightful)

      by Lord Haha (753617)
      Well they have their 5 year plans now don't they. (As in the plan that will govern their internal/external policy for that period of time, similar to how the USSR did back in their heyday)

      So chances are 5 years from now, they might learn the lesson, then again Microsoft might suddenly start selling Linux tommorow too...

      Thing is the Chinese market should be robust enough to handle using mostly domestically made software, they manage quite well with their P1 like processors in the hardware market, who says
  • The wording looks flawed. Free Software respects their independence, although it's not "produced" in China. (After the IIS backdoors were discovered, every government in the world should have moved to free software - give it 10 years.)
  • IANAL ... (Score:2, Interesting)

    by GNUALMAFUERTE (697061)
    But, they can limit Comercial (Don't confuse, i didn't say propietary, i said comercial) software, since it is actually "imported", but can they limit the use of non-comercial Free Software?, I mean, you can put a limit on how much someone can sell or buy, but _not_ in how much he thinks or listens.
    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.
    • Re:IANAL ... (Score:3, Interesting)

      by leerpm (570963)
      They can do anything they want to. But then they cannot really complain when the US reacts against this policy, and introduces a corresponding quota limiting the importation of China made software.
  • by Killswitch1968 (735908) on Saturday February 28, 2004 @09:59PM (#8419974)
    Like tariffs, quotas are used to protect domestic industry at the expense of foreign industries and more importantly consumers. They usually require this protection because they either have a poor product or a product that costs much more than their competetitor's. Preventing imports forces consumers to spend more than they normally would on the same good.

    However in terms of software this may be a blessing for China. Linux's problem isn't price so much as it is marketing. However the real question is whether China will be able to use Linux or must they code their own O/S?
    • by BroncoInCalifornia (605476) on Saturday February 28, 2004 @10:59PM (#8420305)
      Very often protectionism works to help a domestic industry reach critical mass. I know this runs counter to current economic theology. But there are examples.

      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.

      • by SmilingBoy (686281) on Sunday February 29, 2004 @07:34AM (#8421862)
        Very often protectionism works to help a domestic industry reach critical mass.
        Make that a very rarely. Millions of people in South America were impoverished by the proctectionism that prevailed for some decades. It did not grow the domestic industries. It prevented the inefficient domestic industries from becoming competitive with the rest of the world, while at the same time keeping prices artificially high for South American consumers.

        You may or may not have a point about software. The difference to other industries are the extreme network effects. This requires some more thought than can be put in this /. post.

  • by Anonymous Coward
    If you count all the software copied within China as "domestically produced", that is. Maybe their goal should be a little less domestic software production...
  • offshoring ? (Score:2, Insightful)

    by Anonymous Coward

    Software developed locally in the US vs that which is shipped off to India ? Congress critters trying to change legislation on H1B? Am I trolling ? They're both quotas, one on workers and the other on software (their product).

    How exactly is demanding American workers be given preferential treatment for IT jobs different from a market in a country putting a quota on foreign software?

    Neither one of those is right, but some people in those countries want both to happen. Having said that, this could be the sh

  • by Anonymous Coward
    It is pretty hard to pin a country on Linux (or *BSD) these days. They are pretty much children of the world (including China). I wonder if the Chinese Goverment will take this into consideration when establishing its quotas...
  • by leerpm (570963) on Saturday February 28, 2004 @10:02PM (#8420002)
    This will just backfire on them. Irregardless of whether this is designed to reduce Microsoft's monopoly, a quota that restricts the use of ALL foreign software is going to have a negative impact on China's ability to advance their economy.

    It will help local software companies, but there will probably be no net gain to the nation as a whole. When you restrict the ability for domestic companies to use foreign software (especially when it is the best tool for the job) you are handicapping economic growth.
    • Uh, NO. (Score:3, Insightful)

      by Svartalf (2997)
      If they're importing stuff, their economy suffers if they're not exporting more than they're importing. Currently this is the case with things, but to say that you're handicapping economic growth by not importing things, implies you know very little about how economics works.
      • Re:Uh, NO. (Score:5, Interesting)

        by Brandybuck (704397) on Saturday February 28, 2004 @11:44PM (#8420483) Homepage Journal
        Like the labor theory of value, this is another economic myth that just isn't true. A unbalanced level of trade may indicate a problem, but the symptom is not the problem.

        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.
    • by martin-boundary (547041) on Sunday February 29, 2004 @02:15AM (#8421152)
      This will just backfire on them. Irregardless of whether this is designed to reduce Microsoft's monopoly, a quota that restricts the use of ALL foreign software is going to have a negative impact on China's ability to advance their economy.
      I should think that this will in fact improve China's ability, rather than backfire.

      Most of China's IT requirements are local, ie they don't sell a lot of software overseas. So their IT products 1) don't have to be world class, and 2) are better adapted to the local economy.

      On the other hand, by creating even sub-world class standard software locally, they are training and building up their ability. If they do this for a generation, their subsequent products may well be world class the same way Japan's are.

      It will help local software companies, but there will probably be no net gain to the nation as a whole. When you restrict the ability for domestic companies to use foreign software (especially when it is the best tool for the job) you are handicapping economic growth.

      China's economy (and therefore its IT usage) is different from more developed countries', so why should they use foreign technology which is adapted to more advanced nations? It would be like using an enterprise CRM system to manage the local garage sale.

      IMHO, they're doing the right thing for their economy as a whole.

  • Excellent News! (Score:5, Interesting)

    by Open $ource Advocate (754298) on Saturday February 28, 2004 @10:03PM (#8420003)
    Quoted from the article:

    "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.
    • Re:Excellent News! (Score:5, Insightful)

      by jonman_d (465049) <nemilarNO@SPAMoptonline.net> on Saturday February 28, 2004 @11:12PM (#8420357) Homepage Journal
      Software cannot be a "basic social right." By definition, software must be created by someone. Someone must do work to create software. Therefore, software is a product for a consumer.

      Free speech is a right. Software is a commodity.
      • Re:Excellent News! (Score:3, Insightful)

        by foolip (588195)

        Water cannot be a "basic social right." By definition, water must be purified by someone. Someone must do work to produce drinkable water. Therefore, water is a product for a consumer.

        Although water costs money to clean and transport it is a basic social right to have access to it. It does not follow that something is a product for a consumer just because it takes work to be produced. We can commoditise things that cost money, examples would be water, public transportation and health care. Although all th

      • Re:Excellent News! (Score:3, Insightful)

        by RoLi (141856)
        By definition, software must be created by someone.

        Yes, but it must only be created once and can be used millions of times afterwards.

        Which is exactly the reason why software is not just another product that can be treated by the same laws like other products. It's fundamentally different and models that would fail miserably for most other products can turn out to be the best for software.

    • Basic software services should be cheap, just like water, electricity and gas.

      Water is not cheap -- neither is gas, nor electricity. Just ask the tens of millions of people who can't afford them.

      Furthermore, ditto food -- not cheap, for the starving.

      -kgj
  • by Espectr0 (577637) on Saturday February 28, 2004 @10:04PM (#8420014) Journal
    this may work for goverment-issued computers, but i dont think the Illuminati has to worry about the home systems
  • by Aphrika (756248) on Saturday February 28, 2004 @10:04PM (#8420015)
    I'd wager that their domestic software industry will do well, but their domestic industry as a whole will not.

    Why?

    Ok, limiting software that people can use limits people's choices (obvious), but it also removes the ability for people to choose the absolute, best software they need to do their job. Consequently, you'd have to make some purchasing decisions which might actually affect the ability of your company to do work. Imagine how a video post production house trying to get by without AfterEffects, Flame, 3D Max, Maya - you get the picture.

    The only way they could possibly circumvent this is by loading their machines up with 70% worth of crap they don't want - hey ho, I think I've found the solution!!
  • by metlin (258108) on Saturday February 28, 2004 @10:05PM (#8420021) Journal
    Before someone screams "Yay! Another victory for the anti-Microsoft lobby", its worth noting that this is not good.

    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?
    • by Killswitch1968 (735908) on Saturday February 28, 2004 @10:12PM (#8420078)
      I agree with much of what you said except:
      "While other countries respect trade laws at the expense of their workers, industry and economy, why should China be allowed to be any different?"

      The whole point of trade is that it isn't an expense. It's the only 'free lunch' there is in economics. If Japan were to put up big barriers to US imports, the US would be MUCH worse off by putting up barriers to Japanese imports.
      Protectionist policies hurt everybody, except for a minority of grossly inefficient competetitors interested in keeping their profits high by exploiting consumers through tariff legislation.
    • I think what China is doing is extremely bad for me and others alike in the US, but excellent for it. Protection makes sense when mixed with competition. I just hope it finds a suitable 'x' in the x% local-competition and 100%-x% aggressive-open-competition formula.

      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 res
  • 70%? (Score:5, Interesting)

    by lightspawn (155347) on Saturday February 28, 2004 @10:05PM (#8420023) Homepage
    the government may require that up to 70% of software on Chinese computers is produced domestically.

    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.

  • by Ungrounded Lightning (62228) on Saturday February 28, 2004 @10:07PM (#8420032) Journal
    Back during the "Japanese Invasion" of the auto industry (when the Japanese got their quality up and held their price low, resulting in a major market shift among consumers) the US passed similar legislation, requiring a percentage of "US content" in any company's cars sold in the US. I think the number was also 70%.

    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.
    • Bullshit.

      There were no such laws passed in the US. There were a whole lot of "Buy American" calls from workers and some politicians but there were no laws passed because it is illegal under the WTO and it anti-competitive behaviour and most people who understand the free-market knows that it would be counterproductive.

      Japanese auto-makers opened American plants because during much it was much cheaper to produce the vehicles and sell them locally rather than import them from Japan (or elsewhere) where yo
    • voluntary (Score:3, Informative)

      by kayen_telva (676872)
      Japan placed voluntary restrictions on exports to the
      United States of cotton goods (1957), steel (1969),
      wool and synthetic fibers (1972), color televisions (1977),
      and automobiles (1981).

      http://www.jinjapan.org/access/trade/friction.html
      http://www.cpas.c.u-tokyo.ac.jp/cis/asia/eng/85-H7 81-32.html
  • by Osrin (599427) on Saturday February 28, 2004 @10:10PM (#8420051) Homepage
    So I guess they won't be using Linux or OpenOffice then.
  • by nuckin futs (574289) on Saturday February 28, 2004 @10:10PM (#8420057)
    so, if Microsoft (or any foreign software company) decides to outsource some software development to China, will it be considered a domestic product, since it would technically be made in China?
    • by 2Bits (167227)
      Bah, you don't have to.

      [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, ... are all selling in China.

      All they have to do is find someone here (and preferably someone with good relationship) to start an
  • by t0qer (230538) on Saturday February 28, 2004 @10:11PM (#8420063) Homepage Journal
    China has an evil invader from space, Bill Frieza, who is seemingly unbeatable. China can either not fight Bill Frieza, in which case he will enslave them to fight smaller battles around the universe, or china can try and fight Bill Frieza and end up being anhiliated.

    China's only hope is to gather together the 8 magical Dragonball CPU's to summon the Eternal OS, who will grant them one wish so they can defeat the evil Bill Frieza.

    Will China be able to find all 8 Dragonball CPU's in time? Will Bill Frieza anhillate the earth? Find out next time on Dragonball Z!
  • Do you think? (Score:4, Insightful)

    by boudie (704942) on Saturday February 28, 2004 @10:12PM (#8420069)
    This could be one of those rare cases where the enemy of my enemy is not my friend.
  • Ah the WTO (Score:5, Interesting)

    by Anonymous Coward on Saturday February 28, 2004 @10:12PM (#8420077)
    China has violated so many of the promises it made when it entered the WTO(while still enjoying all the benefits) this really will not matter. So far, China has been making a lot of influential WTO members very rich so they look the other way. Basically China has immasculated the WTO, and I for one am sick of it. They want all the benefits but none of the costs of free trade. Every time America tries to protect one of its own industries, China raises a huge hissy fit and threatens the US with a trade war, although the amount of exports to China are so small we really could do without them.
    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:Ah the WTO (Score:5, Interesting)

      by Anonymous Coward on Saturday February 28, 2004 @11:45PM (#8420485)
      Funny, every other country says the exact same things about the US and its adherence (or lack thereof) to the spirit of the WTO. Basically the US has emasculated the WTO. Take a look at their creative interpretations in regards to steel, electronics, patents, grain, trucking regulations, etc.. The US can't have it both ways and lots of countries resent the US (maybe undeservedly in some cases) for condemning others but having thousands of its own protectionist policies itself. Slamming China for the exact same things the US is doing is at best ignorant and at worse hypocritical.
      • Re:Ah the WTO (Score:4, Informative)

        by bakes (87194) on Sunday February 29, 2004 @02:01AM (#8421088) Journal
        According to projectcensored.org [projectcensored.org], the US has either violated or subverted:
        • the Conprehensive Test Ban Treaty (CTBT)
        • the Treaty Banning Antipersonnel Mines
        • the Rome Statue of the Internaitonal Criminal Court (ICC)
        • a protocol to create a compliance regime for the Biological Weapons Convention (BWC)
        • the Kyoto Protocol
        • the Anti-Ballistic Missile Treaty.
        The report continues: "The U.S. is also not complying with the nuclear Non-Proliferation Treaty (NPT), the Chemical Weapons Commission (CWC), the BWC, and the UN framework Convention on Climate Change". And as the parent comment mentions, there are plenty of violations of the WTO as well.

        Dear Mr Bush: It's not your 'FREEDOM' that the terrorists don't like...
    • Re:Ah the WTO (Score:3, Insightful)

      by Tom (822)
      Basically China has immasculated the WTO, and I for one am sick of it. They want all the benefits but none of the costs of free trade.

      You spelled "USA" wrong. The first letter isn't "C" and the middle part isn't "hin".
  • by penginkun (585807) on Saturday February 28, 2004 @10:16PM (#8420093)
    Yessir, I love it when people discriminate like that. Nobody screams about enforced quotas for US Government jobs and contracts, but let a foreign government demand a quota on something as simple as software, and look out! Love double standards! Love 'em to death!
  • China and the WTO (Score:3, Insightful)

    by tealover (187148) on Saturday February 28, 2004 @10:22PM (#8420130)
    China has to be very careful about proposing legislation that will get knocked down by the WTO. The Chinese are very sensitive to reproachment by other countries and international organizations. I don't know how they will react if the WTO finds them guilty of violating WTO agreements and fines them billions of dollars.

    If China believes it has the capacity to create a powerful software industry, it should get out of its way rather than remove incentive for them to compete.

  • Wipeout for WIPO (Score:3, Interesting)

    by Doc Ruby (173196) on Saturday February 28, 2004 @10:23PM (#8420137) Homepage Journal
    Hopefully this Chinese action will destroy the WIPO. The entire reason we in America are sacrificing our jobs/environment/politics/freedom here is to create a stable WTO, in which China is an open market for those higher value goods we produce for them as they grow. If they get away with this protectionism, we should trash this slavish WTO devotion, and just practice fair trade (not the neoliberal "free" trade), negotiating to protect our consumers and labor market from their predatory capitalism.
  • by beforewisdom (729725) on Saturday February 28, 2004 @10:25PM (#8420147)
    That is, demand that 70% of the software used in the US be made from American programmers.

    That would sure help preserve the US IT industry.

    Then again, Bush would have to care first.

    Steve

  • by pla (258480) on Saturday February 28, 2004 @10:30PM (#8420171) Journal
    the government may require that up to 70% of software on Chinese computers is produced domestically.

    I see a great opportunity here for some clever Chinese student to make a fortune...

    Write and sell a fairly cheap (whatever would compare to USD$20?) set of a few thousand "utility" programs, that do basically nothing (such as "print-a", which "inserts the ASCII character 0x41 into the standard output stream, for use in automated scripting requiring the letter 'A'", as an example of what I mean), but absolutely guarantee that a company can remain in compliane with this quota no matter how much imported US software they use.

    The only problem involves the definition of "percent" as relating to software - Does it mean "per 100 packages" or "per 100 bytes"? If the latter, a similar approach would work (such as "lib-a", which fills exactly 70% of your hard-drive with readily-accessible "A" characters), but would certainly seem a lot more wasteful of a large HDD...
  • by Waffle Iron (339739) on Saturday February 28, 2004 @10:34PM (#8420195)
    The statement from the summary:

    While the details are still unclear, the government may require that up to 70% of software on Chinese computers is produced domestically.

    implies that they plan to issue a general nationwide ban on too much foreign software. However, that's not what the article says. It actually says:

    Officials say a new law will be announced by this summer requiring a minimum percentage of software purchased by the government be produced in China.

    So we see that this policy would only apply to government purchases. Thus, this is little different from when a corporate IT department standardizes on choosing certain software products and not others.

    The U.S. federal and state governments also promote a variety of policies by placing extra conditions on their procurements and contractors.

    So, while this is somewhat interesting, this doesn't look to me like as big a trade issue as a lot of posts seem to be making of it.

  • by andy1307 (656570) * on Saturday February 28, 2004 @10:48PM (#8420266)
    For this and the Chinese tax on imported chips? [semiconductorcouncil.org]

    China applies a 17% value-added tax (VAT) on all semiconductor sales. In an attempt to encourage local production, China is granting rebates to products made domestically. Semiconductors manufactured in China are eligible for an 11% VAT rebate (resulting in an applied rate of 6%), and semiconductors designed and manufactured in China receive a 14% VAT rebate (resulting in an applied rate of only 3%). According to some reports, the company must use the refunds to do research and development in China.
  • Possible bad things (Score:5, Interesting)

    by evilWurst (96042) on Saturday February 28, 2004 @10:52PM (#8420280) Journal
    I can see several ways in which this could be bad for all the rest of us (while not being all that good for China, either).

    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.
  • by krusadr (679804) on Saturday February 28, 2004 @11:08PM (#8420341)
    "If a software program is dominant for a long time, it's harmful for the development of the software industry," said Li Wuqiang of the Ministry of Science and Technology.

    You my friend get +5 Insightful from me.
  • by cyberjessy (444290) on Saturday February 28, 2004 @11:08PM (#8420343) Homepage
    Its interesting to note how slashdot user opinions change overtime. A few years back, capitalism and freedom were reigning supreme. Such protectionist policies werent really appreciated anywhere.

    The US was the champion of capitalism, sometimes even arm twisting countries into opening their markets. Those that did so were endowed lavishly with grants and loans. Of course, opening markets and free economies lead to more social freedom too which would be better in the longer term.

    But then, perhaps the US forgot the implications of free competition on their own economy. Suddenly americans want protectionist legislations. Outsourcing is the top-demon.

    Ahh .... wouldnt it be better if americans would be courageous to just compete with the best of the rest and take head on their strengths?
    Well .. that is the freedom that 'you' championed.

    Now when you look at what is happening in america, china and maybe what will happen in many other countries, are we going back to a milder version of socialism?

    Disclaimer: I would have never been against protectionism for the sake of protecting jobs in any country. But then you worked so hard at doing away with that system. You promoted competition. Good. But dont get scared when it comes back at you!

    • You're confusing a single economic policy with an entire socio-economic political philosophy there. The governments of most countries were protectionist prior to the mid-XIX century (for instance, England had the infamous "Corn Laws" and "Navigation Acts"; and, in the U.S., the New England States nearly seceded in the late 1820's over tariffs), but that didn't make these governments socialist in the least. It was classical liberalism (today's conservatism, at least in economics) that proposed free trade.
  • by Hao Wu (652581) on Saturday February 28, 2004 @11:42PM (#8420478) Homepage
    China tried same result in 1970s. Each small village and rural family had to produce X steel amount to meet national goal. Result was pathological disaster [arizona.edu].
  • WTO and Microsoft (Score:5, Insightful)

    by i1984 (530580) on Sunday February 29, 2004 @12:23AM (#8420648)
    Right. I'll take this a lot more seriously when the WTO starts throwing fits about the well documented abuses of Microsoft's own monopoly power in the marketplace. Until then, it seems a bit hypocritical of the WTO to be barking about -- fundamentally -- Microsoft being victimized by a the presence of an uneven playing field.

    The Chinese appear to be acting unilaterally in what they perceive as their best interest. Maybe they're just following the U.S. lead.

    I honestly believe the rule of international law is an important value, but also believe the U.S. could stand some introspection on this very same point. And as for Microsoft, I can't tell that the company has learned anything from its run-in with the Justice Department, except for how to be sneakier in extending its monopoly, a reinforced appreciation for the power of public perception, and perhaps a clearer understanding of why it's worthwhile to donate generously to politicians who don't believe that the power of large businesses should in any way be restrained.
  • Brazil in the 80s (Score:3, Informative)

    by Pseudonymus Bosch (3479) on Sunday February 29, 2004 @01:55AM (#8421058) Homepage
    Soemthing similar happened with hardware and software in Brazil in the 80s.

    Eventually, the exception system was widely abused. Some companies used the protection to develop, some companies suffered of the lack of competition.
  • by autopr0n (534291) on Sunday February 29, 2004 @02:06AM (#8421103) Homepage Journal
    Looking at this on a purely analytical level, this is a bad idea. I mean, how do they plan to enforce it? the 70% figure... how do they measure it? Bytes? Can you cheat the system by writing a 3 line VB script that includes 100 megs of high-res .tiff files?

    Obviously, they can't go by lines of code with closed source systems.

    Ultimately this could backfire and cause the computer industry there stagnate as

    A) companies spend time writing applications that they don't need to write in order to maintain quotas. It would be better for Chinese coders to spend time writing code that actually needs to be written and

    B) it means people actually need to worry about software was written. That requires a lot more information and checking. Chinese OEMs, VARs, etc, are going to have to spend a lot of time (read: money) on figuring out where all this code comes from.

    Any time you add an "unnatural" regulation, you're creating a lot of expenses beyond what it would cost simply to comply by forcing people to figure out if they're complying.

    A "natural" regulation is something like "don't drive over 75mph" or "you must add iodine to salt if you produce it". It's obvious if you're driving over 75, and it's obvious if you're adding iodine to your salt. Pretty much any taxation would be an example of an "unnatural" regulation. It's natural to simply give the person all the money for the job they do, and it takes a lot of work to figure out how much you owe in taxes. And it creates a huge infrastructure (and cost) in collecting and enforcing those taxes.

    Of course, it's a gradient, but I'd say this requirement is pretty unnatural. How do they figure OSS with or without some Chinese contributors? What about code from US companies with outsourcing operations in China? It seems like a big mess to me.

    One easy way to do it would be to require that 70% of licensing fees go to Chinese companies. It's pretty obvious who you're paying, and it would certainly accelerate the adoption of OSS in the middle kingdom :)
  • by Karl-Friedrich Lenz (755101) on Sunday February 29, 2004 @04:21AM (#8421481) Homepage
    There is precedent for this in the EU television Directive of 1989 [eu.int].

    That Directive requires that European broadcasters reserve a majority of broadcast time for European works.

    If China is attacked under WTO rules, they can point to this unfortunate precedent for cultural protectionism.
  • Please, RTFA! (Score:3, Informative)

    by B2382F29 (742174) on Sunday February 29, 2004 @07:44AM (#8421880)

    The problem with most of the replies here is that they didn't read the article.

    requiring a minimum percentage of software purchased by the government be produced in China

    So, please, don't cry about companies not being able to choose the best tool. They can. It's more like the decision of the Munich local government. But it seems most of the US-based commenters lose their ability of independent thoughts when it comes to China.

  • by Britz (170620) on Sunday February 29, 2004 @08:03AM (#8421913) Homepage
    Because I would get sick and angry. The American govt. and many American institutions always talk in favour of free trade and try other nations to come into the WTO. But while talking like the biggest supporters of globalisation abroad (maybe because of jobs they talk different at home) the US has never been very supportive of free trade.

    They only allow free trade when it serves their interest. This is not to say they are the only ones, because the EU also protects their markets wherever they can.

    Only Americans seem to think that the US allows free trade, which it doesn't. The only countries that swallowed this load of crap and opened their boarders to foreign products were developing and least developed nations.

    While the EU and the US heavily protect their markets (mainly through subsidies, 'cause they can afford to) in some areas China is now doing the same in other areas.

    What China is doing is bad, but they are just following up on the example set by the US.
  • by nurb432 (527695) on Sunday February 29, 2004 @01:33PM (#8423174) Homepage Journal
    While slightly OT, he did bring up the issue.

    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'.

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