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Posted on September 24th, 2008 by Matthew Sparkes

China: no source code, no sales

China is apparently considering demanding source code from hardware manufacturers, and banning the sale of products from companies that don’t comply. It’s being called an “obligatory accreditation system for IT security products,” but to me it sounds more like a worrying ultimatum.

This would be a drastic move for any Government, but manufacturers are extremely worried about giving such information to China in particular because of its, shall we say, lax attitude to copyright and patent law. In fact, MI5 has even gone so far as to warn UK companies in the past about the threat of Chinese hackers going after trade secrets.

Many products available for sale in the country bear a striking resemblance to Western products, and lawsuits have been filed in the past with varying levels of success, so tight security seems to be a better method of protecting IP than litigation. Under the new rules this strategy could be impossible.

The implications of this are bigger than you may think. On my recent trip to Korea to visit Samsung I was surprised to find out that a lot of consumer devices are physically identical. Samsung makes the same panels for its own televisions as it does under licence for Sony, for example, but the software that controls it is proprietary, and accounts for a lot of the picture quality. The code is far more sensitive than the hardware.

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4 Responses to “ China: no source code, no sales ”

  1. Fed Says:
    September 24th, 2008 at 8:12 pm

    Manufactures have long used identical kit. I can recall a few years ago that Sony’s DVD RW drives were mane by Liteon. The only difference being the firmware and the price. Sony’s were roughly twice the price.

     
  2. nicomo Says:
    September 24th, 2008 at 8:19 pm

    Would this be the most apt moment to use that teen phrase “owned”? I’ve no idea.

    but the two words of note in this article are “apparently considering” meaning they haven’t done it yet and that leaves foreign investors a window to take advantage of. One on a tall building may come to mind – but their are always sales abroad that may help them survive, and surely other governments should be applying pressure, forget M$ though.

     
  3. David Bayon Says:
    September 24th, 2008 at 10:32 pm

    There’s a big difference between a company like Lite-On making drives for other companies to put their branding on, and a Chinese firm reverse-engineering or stealing the source code of a product to produce identical, cheaper copies. One is a common legal contract, the other is theft.

     
  4. Paul Ockenden Says:
    September 25th, 2008 at 10:03 am

    I know someone whose company makes big expensive machines. They are sold all around the world, but there are certain countries they they refuse to sell to.

    He told me “If we sell a machine to China, they pay OK, but it would be the only machine we’d ever sell there. After that, they’d just make copies”.

    But we were like that once. And the US was like that once. I’d imagine China (and others) will start to play ball far faster than most of the West ever did.

    P.

     

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