Xenophobes not the only ones wary of China

Microsoft's Ballmer this week complains of continued software piracy

My earlier post about security experts warning that some hires at U.S. companies are recruited by China to work as intelligence agents prompted much discussion. Besides the obsession by some with how widely available black duck eggs are in Chinese restaurants in the U.S., other commentors accused the subjects of the article, and its author, of xenophobia, making broad generalizations about the Chinese.

But concerns about China's business practices go beyond suspected corporate espionage. There's continuing concern about widespread violation of intellectual property rights, as evidenced by today's comments  by Microsoft CEO Steve Ballmer. Visiting Singapore, Ballmer said that Microsoft sees better prospects for growth in India or Indonesia than China because of rampant software piracy in China, according to the IDG News Service.

"India is not perfect but the intellectual property protection in India is far, far better than it would be in China," Ballmer said in another report by Bloomberg News on remarks he made earlier in the week in Hanoi, Vietnam.

The Bloomberg report also cites data from the Business Software Alliance, formed to fight piracy, and the research firm IDC, which states that the value of pirated software in China almost doubled to $7.58 billion in 2009, from 2005. Also, Sandeep Aggarwal, a Microsoft analyst at Caris & Co. in San Francisco, estimated that as much as 95 percent of the copies of Windows Office and 80 percent of the Windows operating systems in use in China are pirated.

A spokesman for the Ministry of Commerce in Beijing, Chen Rongkai, told Bloomberg the Chinese government has enacted more than 1,000 measures intended to enforce intellectual property protections and that China's effort to protect IP "is universally recognized." But Ballmer says Microsoft is taking in less revenue from China than it is from India or South Korea, even though China's gross domestic product is twice that of those two countries combined.

We can take Chen Rogacki at his word that China is taking steps to protect intellectual property, but we need to also give weight to Ballmer's assertion that the country has a long way to go to improve its software piracy reputation.

It goes back to what security expert Ira Winkler said in his Web cast last week that started this debate. China, Winkler said, has institutionalized espionage and other suspect business practices in order to "acquire technology" for the benefit of Chinese companies and the nation as a whole. And "acquire," he said, is a euphemism for "steal."

This is not to say that China can't come around and adopt legal and legitimate business practices followed elsewhere in the world. And it's not to say that criticism of such practices -- be it corporate espionage or software piracy -- is an indictment of China in general or its people. But it does say that this is a problem China needs to fix as it grows into the global economic power it is on track to become.

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