Analysis: Is China losing its allure?

If you were to take a guess at some of the major news themes of the forthcoming year, China might well sneak into the top five.

By Simon Quicke

If you were to take a guess at some of the major news themes of the forthcoming year, China might well sneak into the top five.

An interesting article published in The Daily Telegraph last week quoted a senior British individual at a technology company based in China, who said conducting business there was becoming increasingly difficult.

Subsidies were being given out to domestic, mostly state-owned, rivals, giving them an unfair advantage over their foreign counterparts, while regulations force clients to buy from only Chinese sources, according to the Telegraph's source. There are also concerns about the infringement of intellectual property.

The decision by Google to review the feasibility of its business operations in China was seen largely as being an issue about privacy and censorship and the rights of users to share information.
But given the other concerns expressed in the Telegraph, perhaps this is only the tip of the iceberg.

Over the past few years, China has been seen as one of the important developing markets because of the size of the customer base and the strength of the country's economy. As a consequence, nearly all the major vendors and international channel players have a foothold in China.
But with fears now surfacing about the way the country operates and the attitude towards Western technology companies, the Google row could well be only the first of many.
The danger, of course, is that the battleground over intellectual property rights and the clash between communism and capitalism is one that will be fought out by companies rather than by politicians and diplomats.
From the perspective of the tech sector, there are genuine concerns that not only will it be hard to protect intellectual property in China, but in the long term it could also be difficult to maintain a stake in that market.
This was last published in February 2010

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