Through privatization and the transformation to capitalism, Chinese market conditions are evolving apace.  The IT industry has experienced substantial domestic growth and foreign investment.  Even so, the central government (and to some extent, provincial governments) still exercises command-and-control on industry to promote domestic producers on occasion. Indeed, the Chinese have used standards setting as a tool to impact trade and advance Chinese industry over foreign competitors in their vast potential market.

As is well known, China has tried to force domestic technologies, ‘indigenous innovation,’ into IT used in China, even imports. The goal clearly is to “level the playing field” for domestic producers. But such a standards strategy can result in competitive disadvantage for a country. Such a policy makes it difficult for a multinational corporation to build facilities in or outsource work to a country that adheres to standards that differ from globally accepted standards. Cloud computing needs will exacerbate these factors.

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China is on track to become the world’s largest economy some time in the next few decades. This could not have happened without the development and widespread deployment of scores of standards that provide an infrastructure for international trade. The tightly integrated supply chains that now link Chinese firms to Western consumers rely on standards for containerized shipping, electronic order flow and payment, bar codes, and even management systems.

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Standardisation has the potential to be an influential instrument in improving China’s economy, society and government in numerous dimensions, so long as standardisation policy is able to be effectively embedded in both other related policy areas at the national level and the international system of standardisation.

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While a lot of attention has been placed on the growing standards war for next generation wireless network standards between LTE and WiMAX – for instance see here and here – a number of interesting developments have been made regarding the Chinese developed outsider TD-LTE.

TD-LTE is a standard for wireless mobile networks and 4G candidate which has been developed by China Mobile, building upon the TD-SCDMA 3G standard. The TD-LTE stems from China’s indigenous innovation policy which seeks to reduce China’s reliance upon foreign IPR by supporting the use of domestic alternatives. (Don’t miss the upcoming Talkstandards open forum for further discussion on China’s standards policy).
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In November last year (2009), the Standards Administration of China (SAC) issued for public comment their “Proposed Regulations for the Administration of the Formulation and Revision of the Patent-Involving National Standards”. As previously outlined, the proposal drew considerable criticism due in large part to requirement that patents be made available either royalty free of for a nominal fee to be eligible for inclusion in Chinese national standards.

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In April, the Chinese Ministry of Science and Technology (MOST) made available for public comment a draft notice outlining a series of proposed changes to rules which relate to the country’s indigenous innovation policy. The proposal – “Notice on Indigenous Innovation Product Accreditation in 2010” (English translation) – drafted in conjunction with National Development and Reform Commission, and the Ministry of Finance will relax a number of requirements for foreign products seeking accreditation and listing upon the approved government procurement lists.

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With a brewing standards war heating up, eBooks are expected by many to revolutionize the publishing industry in much the same way that digital music revolutionized the music industry. China in particular has seen considerable growth in both eBook technology uptake and investment, and is expected to reach 30% of the global market the year.

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In Strategic ICT standardization by China we ask the question: So what effects can be expected from this level of political involvement? The role of China is also in the spotlight in the latest issue of Fortune magazine China buys the world (read article here).

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The Chinese government is showing considerable interest in ICT standardization. The Chinese State Council’s official policy clearly states a long term goal to reduce dependency of foreign ICT technology and to reduce payments to foreign innovators.
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The Chinese policy to promote “indigenous innovation” is perhaps most evident in the telecom sector as recent developments show.
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