China: no source code, no sales

Wednesday, September 24th, 2008

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.