Monthly Archives: September 2007

Nokian, Snog Ericsson, Aifung and the (almost)likes

Established mobile device manufacturers are battling with a formidable bunch of competitors: their products make it quicker to the market and at a cheaper price. So fast as being almost pre-emptive: the Aifung was already on the market 6 months before the IPhone’s introduction in the USA. Priced rather competitively (USD 270 compared to USD 300 for the original), it works – supreme outrage - on any network, and not only on AT&T’s. 

Imitators don’t stop there: some of them even offer additional functionalities to products that haven’t been released yet! Worst of all, it is hard to put a name and a hand on them – the only place you can find them is in the market or on the InternetAifungCounterfeit producers use the southern-China manufacturing base to churn out their products and if one of their operations was to be discovered and closed, they can relocate easily to one of the 400 factories who’ll gladly do the work.In the software business, annual loses due to piracy are estimated at more than USD 5 billion for China alone*. With a 600 million mobile users base, growing at the monthly rate of 5 million, imagine what a small percentage of counterfeit products can do to a company’s bottom-line… 

So, can bona fide innovators actually benefit from the trend? Ironically, since counterfeiters’ competitive advantage lies in speed-to-market and additional functionalities, the Nokias and Ericssons of this world could in fact integrate some of the “counterfeatures” into their own products, without fearing too much of an intellectual property legal suit. Moreover, customers know what they are getting: counterfeit products do not offer the same level of quality – they may even be health hazards – and obviously come without a warranty. It may work for a while but, after the second breakdown, many customers realise that quality has a cost and suddenly start to find value in branded products.

That said, given the success of counterfeit products among foreign buyers in Asia, marketing theorists may well have to include a category of «early counterfeiters» in their product adoption model…

* Estimates put at USD 650 billion the annual cost of counterfeit products to businesses.

Tomorrow's eco-city is in…China

Have you heard of Bedzed, the environmentally-friendly housing development near London? Well, you can already forget about zero-emission cars or zero-emission buildings. You can even forget about Bedzed. Since 2005 a British engineering firm has been working on a project to develop Dongtan as the world’s first eco-city on Chongmin Island, off Shanghai. That’s actually 2 years before the UK unveiled its first zero emission home.

In theory, Dongtan will produce its own energy from wind, solar, bio-fuel and recycled city waste. Clean technologies such as hydrogen fuel cells will power public transport. A network of cycle and footpaths will help the city achieve close to zero vehicle emissions while farmland within the Dongtan site will use organic farming methods to grow food.

Surprised? You shouldn’t. China may already have overtaken America in greenhouse gases emission. The government has taken courageous measures to tackle the issue by passing an ambitious set of environmentally-friendly policies (e.g., reducing new building’s energy consumption by 50%). It is also betting on the innovation spur generated by domestic and foreign companies joining the green bandwagon. 

The project has nonetheless caused controversy. Nicknamed eco-Potemkin city, its detractors question whether Dongtan will be an eco-city with heart and soul and point out that it is only a showcase project, distracting from the much larger environmental issues China fails to address.

That’s missing the point. For sure, the final result won’t be exactly as planned: like any urban development project, people will twist the design and adapt it to their daily realities and yes, China’s massive environmental problems won’t go away. But even if Dongtan lives up only to half its expectations, it will still send a powerful signal to developers and policy-makers in both developing and developed economies to think twice about discarding utopian urban projects from the outset.

A new kind of fire(wall)crackers?

China prides itself on having invented 4 major “technologies”: the compass, papermaking, printing and gunpowder. The latter is thought to have given birth to firecrackers, which in the recent weeks seem to have been extended to firewall crackers.

Germany, the United States, Great Britain, Canada, Japan, Australia and New Zealand have all reported Chinese cyber attacks on government departments during the last fortnight. None of these countries, of course, officially pin-pointed the attacks to Beijing, attributing them rather vaguely to Chinese hacking groups. On his side, the Chinese government has pledged “forceful measures” to combat international computer hacking.

Amid all this smoke, how serious and surprising are these attacks? For Washington, the People’s Liberation Army (PLA) has “demonstrated the ability to conduct attacks that disable US systems…and the ability in a conflict situation to re-enter and disrupt on a very large scale”. The most plausible theories on why the Chinese authorities might choose to foster patriotic hacking are either to test its potential as a weapon or simply to send a signal to other great powers that they have the capability to do so. The Chinese army is not alone either: most countries have developed alternative capacities in parallel to their more conventional forces of destruction – some analysts suggest as many as 120 countries are actively pursuing cyber warfare. In fact, the threat of state-sponsored hacking has dominated the thoughts of security officials around the world for a long time.

“Chinese-made” cyber warfare is nothing new: the PLA actually theorised its use from the mid 1980s. It is believed to have developed its cyber warfare capacity in order to paralyze Taiwan in case a conflict breaks out between both countries. China also published a white paper in which “informationized armed forces” are one of the three pillars of its military strategy, setting itself the target of building a cyber army which could win such a war by 2050. Put differently, China sees little difference between asymmetric warfare and conventional warfare.

In our era of knowledge economy where most wars are waged in markets rather than battlefields, couldn’t multinationals and research labs be the next targets?

Big brother is filming you

Remember all that fuss about Britains’s identity card or London’s congestion charge?

The southern China city of Shenzhen managed to bundle both issues together by installing more than 20,000 police surveillance cameras (New York has 3,000…) that automatically recognise the faces of police suspects and detect unusual activity.

If that wasn’t enough, 12 million people will by issued residency cards fitted with powerful computer chips, holding their name and address but also work history, educational background, religion, ethnicity, police record, medical insurance status and landlord’s phone number. Even personal reproductive history will be included, for enforcement of the “one child” policy. In theory, the scheme should be deployed across all large cities throughout the country for the 150 million people who have moved to a city but not yet acquired permanent residency there. Unsurprisingly, there is currently no law protecting personal data and individuals have no right to access their personal files such as banking and credit records.

Time to worry? Not quite. An enhanced ID card chip program (Golden Shield) has been around for a decade but the basic version of the scan-able card hasn’t been launched anywhere. A medical record plan from 2000, under which community-based clinics were surveying everyone in the community about health conditions and environmental hazards in homes (to build a massive national database predicting diseases) had the same fate.

The good news is that China, amid rising anger at how easily people’s private details are falling into the hands of advertisers, is planning to introduce its first law on protecting personal data.