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China Plans Domestic Software Quotas
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."
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.
In order to fight the alleged Microsoft monopoly
Maybe they should make some alleged quotas if it's only an alleged monopoly?
Karma: -2^0.5 . Mainly due to the imbibing of dihydrogen monoxide
WASHINGTON--A federal judge has determined that Microsoft holds a monopoly in computer operating systems, strongly criticizing the company in a decisive statement that could signal the outcome of the landmark antitrust case.
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?
Corporations: your universal scapegoat for all society's ills.
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.
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.
Have you read the GNU Manifesto lately?
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!!
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 that they aren't big enough to handle such a protectionist barrier in the short term at least.
Besides that, as for being completely domestic, isn't the Chinese Linux, still underneath it all Linux so they are still importing software...
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?
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.
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.
Bantam Dominique roosters crow a four-note song. Once you've heard it as "Happy BIRTHday" you can't NOT hear it that way
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?
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!
This could be one of those rare cases where the enemy of my enemy is not my friend.
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..
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!
If the average US citizen made $0.70/hr, they wouldn't be able to afford the products made by companies that would be forced to produce them at below-cost to meet the buying potential of their customers. Therefore, these companies go out of business, further adding to the ranks of the unemployed, who can now no longer afford to purchase products by the surviving companies, who now are forced to cut prices again to meet the buying potential of their customers.
Now all that's left is Wal-Mart, and nobody can afford a basket of radishes there anymore.
Wages aren't the only costs involved in production.
Every Government treats people as beasts of burden; The USA government too, they just hide it under labels like those talking about the land of freedom and false patriotism. The first Matrix movie could be understood as a really not so subtle metaphor of our reality, the machines/governments/companys are big monsters that we fed, and they keep us worm and enchanted with virtual crap like tv, confort and hotmail. Then they transformed the movie into a virtual crap that they used to feed what is left of our controlled mind ...
WTF am I doing replying to an AC at 5 A.M on a Friday night?
That would sure help preserve the US IT industry.
Then again, Bush would have to care first.
Steve
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...
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.
MoFscker
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.
"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.
while sco {
wget -O
}
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.
.... wouldnt it be better if americans would be courageous to just compete with the best of the rest and take head on their strengths? .. that is the freedom that 'you' championed.
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
Well
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!
Life is just a conviction.
Actually, no, the continents are North America and South America. There is no continent called America.
Secondly, the idea that Americans can be stuck with the term USians doesn't make sense. After all, that term could just as easily apply to people from the United States of Mexico, or probably a dozen other countries with United States in their name.
Finally, I think I'm going to start calling people from the U.K. "UKians", and I'm also going to start calling people from the E.U. "EUians". After all, someone from the E.U. can't call themselves a "European", since that is the name of the continent and the E.U. does not comprise all the European nations.
In short, all you jokers who think it's fun to tweak Americans with the stupid name "USians", get a life. We're Americans; deal with it.
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.
I suggest you read Slashdot
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.
Don't blame me, I didn't vote for either of them!
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. Quite the contrary, as modern socialism didn't even exist then.
In fact, IIRC, isn't Marxism opposed to tariffs, at least in theory? Aren't they mostly used to become economicly self-sustaining, so socialist states don't need to rely on their capitalist opponents? I could be wrong on that, it's been a long time since I delved very deep into the subject.
The parent and grandparent are both right, with more elaboration:
The parent is correct that if everyone earned 70c/hr, yet remained as product as they are now, the value of the dollar would be much higher, so the purchasing-power-parity in 2003 dollars would remain the same, and hence the "real" cost of living (in PPP 2003 USDs).
The grandparent is correct that if everyone *WERE* to earn 70c/hr, we would have a depression.
How can the parent and grandparent be correct? The fourth-dimension, time, the axis Mardy (Michael J Fox) wasn't very good at in Back to the Future, needs to be remembered. When experienced with RAPID deflation, which implies the power of the dollar increases rapidly, we enter an economy which is reluctant to make investments. The best investment, in a deflating curency, is to hold on to your bank notes or bonds, not to lend loans on houses that this year will cost $100k but if the owner forecloses five years from now will only fetch $20k of a much stronger greenback.
Thus, if we have rapid deflation, or sustained deflation, we will enter a depression where the financial elite close their purses and reap the rewards of monetary growth without making loans to those paupers we commonly refer to as ourselves.
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.
Yes, but apparently it's more worthy of criticism when us USians do it.
Seriously, what I find interesting is that when the U.S. government does something objectionable to those in {insert sovereign nation here} the response from many foreigners is, all too often, to criticize all Americans. "Ugly Americans" and so forth. For my part, if the government of, say, China, does something that I find disagreeable, any criticisms I may have for that action I reserve for those in power who made the decision to take it. I see no reason to insult all those of Chinese nationality or extraction by calling them "Chinesians" or "Chinks" or any other racial epithet because I personally happen to dislike their government or what it has done. That is particularly true given how little control most people in the world have over their respective governments. To all you non-USians out there that persist in identifying all Americans with the decisions made by our leaders I have two words: grow up.
The higher the technology, the sharper that two-edged sword.
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.
/my/ country ... I also wish the democratic populace would lessen their support for flagship varsity teams (MS, IBM, Oracle, etc.) and think of their JV team which may yield a future Varsity player better than any in existence, given the opportunity to train.
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.
Its a favorite argument of the anti-outsourcing crowd to claim that all these companies are murdering themselves because their customers are the same as their employers, and if they outsource, the economy will go bad, and the company will lose all the money they save through outsourcing, and then some.
But what they forget is that the economy of the country they are outsourcing to is going to grow, and they can sell their products there. There's also the fact that A) not all their customers are going to lose their jobs, and B) Not all the people who lose their jobs are their customers. In most cases, income lost due to poor consumer confidence won't be more then the amount of money saved by outsourcing.
It should be obvious with the "jobless economy" that it's possible to have a good economy without a strong job market.
Don't like it? then vote for Kerry in November. I'm willing to put up with trade inequity if it means getting rid of bush. A good job market after I graduate collage is just a tasty bonus.
autopr0n is like, down and stuff.
There is precedent for this in the EU television Directive of 1989.
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.
Lenz Blog
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.
Move Sig. For great justice.
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.