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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.
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!!
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
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!
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
}
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!
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.
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
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.