Of standards, national champions and techno-nationalism

Ever heard of TD-SCDMA, WAPI, AVS or EVD? They are standards pertaining to mobile telephony, wireless LAN, audio-video coding for broadcasting, DVD format and are all developed in… China, as part of the country’s ambition to develop its own intellectual property and create high-technology national champions whose product will flood world markets.

During the last decade, the Chinese government has adopted a policy of strong support to its domestic ICT industry through the creation of national champions (China Mobile, Lenovo) and the development of domestic standards.

Has it worked? Not quite, or at least not yet. EVD is going back to the drawing board because Hollywood movies don’t come in the EVD format. WAPI has been rejected by ISO (International Standard Organisation) to the Chinese delegation’s great displeasure. The fate of AVS and TD-SCDMA is less clear. Both may benefit from the tremendous technological enthusiasm created by the 2008 Beijing Olympics. China Netcom (one of the largest telecommunication companies in China) has announced that AVS will be used as the only standard for IPTV while most Chinese mobile operators are running trial TD-SCDMA networks. If that wasn’t enough, the Chinese government announced last week a government-backed venture capital investment, which will support mainly high-technology and telecommunication industries.

Does it make sense? In certain cases, firms were given a significant competitive advantage when their countries created a system which eventually became a worldwide standard – just imagine what a Chinese installed-base means in terms of economies of scale! On the other side, the history of technology is littered with (very) expensive examples of failed policies in standards-setting.

The good news is that once a country starts to own intellectual property (IP), it starts to protect IP rights!

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