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Google's Experience Raises Doubts About High-Tech Business in China

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Google's rancorous dispute with the Chinese government has brought into the open an often-neglected fact about doing business in China: the free-market values that drive the country's economic growth -- and attract Western firms to the Chinese market -- conflict at a fundamental level with the basic impulses of its political system. Ironically, the contretemps has occurred in a time during which economic and cultural developments are making China's market for high-tech products and services increasingly attractive. In recent years, under pressure from the international community and Western technology firms, the Chinese government has altered both patent laws and its enforcement of them in such a way as to protect the intellectual property of overseas companies more effectively than in the past. Google had agreed to censor its China search engine in some ways in exchange for government permission to enter the market in January 2006.

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									                        Views and News of the Current                               mandated when China joined the
                        Research–Technology Management Scene                        International Trade Organization has
                                                                                    meant clearer recognition of
                        MaryAnne M. Gobble, Editor                                  international patent law and better
                                                                                    enforcement of patents. “Overall the
                                                                                    patent laws have certainly been
            Google’s Experience Raises Doubts                                       improved,” says Xiang Wang, a
                                                                                    partner in the Beijing office of IP law
            About High-Tech Business in China                                       firm Orrick, Herrington & Sutcliffe
                                                                                    LLP. “And despite the complaints
                                                                                    from Western companies, China has
                                                                                    improved its enforcement.”
G oogle’s rancorous dispute with the
  Chinese government has brought
into the open an often-neglected fact
                                          Scientists and engineers are not the
                                          only individuals to benefit from
                                          advances introduced into China from
                                                                                    Several companies under cyber attack
about doing business in China: the        overseas. A rapidly growing middle        The cyber attacks on Google jolted that
free-market values that drive the         class is eager to buy and use the         optimistic picture. And Google was
country’s economic growth—and             products of technology firms, and          plainly not the only target of the recent
attract Western firms to the Chinese       estimates indicate that more than         hacking. “We discovered that at least
market—conflict at a fundamental                                                     20 other large companies were similarly
                                          300,000 Chinese citizens currently use
level with the basic impulses of its                                                targeted,” says Google spokesman Jay
                                          the internet. Spurred by technological
political system. The affair that                                                   Nancarrow. Investigations by other
                                          growth, the Chinese economy has
erupted in January has revealed to a                                                organizations have increased that
                                          survived the financial meltdown of the     number to at least 34.
worldwide audience the strains that       past 18 months more successfully than
have marked relationships between         those of Western nations.            Other issues in the past 12 months
Western high-technology companies                                              have increased concerns about the
and the government since the              In recent years, under pressure from Chinese government’s attitude to
companies first entered the China          the international community and      foreign firms. Western companies
market. But Google’s threat to pull       Western technology firms, the Chinese have long complained of difficulties in
out of China if the government            government has altered both patent   obtaining permits and competing
doesn’t allow it to reveal uncensored     laws and its enforcement of them in  against Chinese companies, but they
results on its Chinese search engine      such a way as to protect the         have now begun to sense tighter
(Google.cn) escalates the intensity of    intellectual property of overseas    restrictions on their activities. Last
those disputes. And the reason for        companies more effectively than in   year, the government ordered vendors
Google’s threat—evidence of               the past. A series of advances       selling personal computers in the
cyber-attacks intended to gain
access to the company’s software
code and the e-mail accounts of
human rights activists—raises
questions about the ability of any
overseas company operating in
China to protect its intellectual
property, and thus to compete
against Chinese companies on a
level playing field.
Ironically, the contretemps has                           Image is available only in print edition
occu
								
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