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China - the exception in tech
How is the world's most populous market likely to develop?

By silicon.com

Published: Thursday 11 September 2003

China's efforts in nurturing its own standard for 3G - the inelegantly titled TD-SCDMA - seem to be paying off and are another reminder that it is a market that may well always prove the exception to many tech rules.

Companies as mighty as Dell, Microsoft and Motorola all preach 'open standards' - or at least a standard that everyone can work to in order to achieve certain things in computing and telecoms. Yet they are humbled by the might of the Chinese market.

In computing terms, the last two weeks have seen China team up with fellow ASEAN giants Japan and South Korea to propose an alternative to Microsoft operating systems, most likely some form of Linux. While it was rib-tickling to hear Microsoft then talk about anti-competitive practices, there is a serious point here about what we might refer to as heavily controlled state capitalism.

The Chinese state and political machine also know the second lesson every businessman in the rest of the world learns - crack China and you're made for life. But they're not about to hand a private company, let alone a foreign private company, a huge blank cheque.

The idea of keeping control of intellectual property rights through home-grown technologies and standards is established. This has been the case with some current and earlier mobile phones as well as TD-SCDMA, developed with Siemens, and with many PDAs.

Then there's the use of Linux and Java, typically for PDAs, PCs, servers and even phones - just ask Motorola, the biggest handset vendor in the country.

And then, bottom of the list of preferences is technology from a domestic player such as Legend or a Dell or Microsoft.

Let's not forget that for 3G, China is likely to move ahead with three standards - the current fixed line operator may well use TD-SCDMA, China Mobile (in which Vodafone is an investor) is likely to go with W-CDMA, Europe's horse and one often known as UMTS, and China Unicom is migrating up to CDMA2000, the standard developed and closely associated with Qualcomm of the US.

A future of giving up some of the market while keeping a good chunk in its own hands looks pretty much a certainty. Few other countries have been able to control a market to that extent.