cirr
ELITE MEMBER
- Joined
- Jun 28, 2012
- Messages
- 17,049
- Reaction score
- 18
- Country
- Location
U.S. Tech Companies Cozy Up to China
Dell, others team up with local players, in deals that conform to China’s desires to turn its companies into innovators
Dell’s founder Michael Dell appeared at an event in Shanghai on Thursday with Kingsoft Chairman Lei Jun to launch their collaboration. PHOTO: PR NEWSWIRE ASIA
By EVA DOU in Beijing and DON CLARK in San Francisco
Sept. 13, 2015 6:47 p.m. ET
U.S. technology companies face a tough choice when it comes to doing business in China: Access to the country’s immense market increasingly requires helping local companies upgrade their skills, leading to deals that could turn erstwhile partners into entrenched competitors.
The dilemma is especially apparent in advance of Chinese President Xi Jinping’s first state visit to the U.S. later this month, a trip that likely will come with a flurry of tie-ups between U.S. and Chinese companies.
In the latest deal, computer maker Dell Inc. has begun collaborating closely with Chinese companies in sectors that Beijing deems crucial to national security, such as helping a Chinese state-owned firm develop high-performance servers, and switching more than 40% of its personal computers sold in China to a Chinese operating system co-developed with a government-administered defense school. Other technology-sharing agreements are expected to be announced before or during Mr. Xi’s visit, which includes a visit to Seattle as well as Washington, D.C.
The deals typically conform to China’s desires to turn its companies from manufacturers of others’ designs to innovators and exporters—and to reduce the country’s exposure to the security risk of relying on foreign technology.
U.S. tech companies in the past year have learned that they will suffer significant repercussions if they don’t transfer technology to China, said Robert Atkinson, founder and president of the Information Technology and Innovation Foundation, a tech policy think tank.
“Everybody is going out of their way to curry favor from the Chinese government.”
Companies such as Apple Inc., Microsoft Corp. and Cisco SystemsInc. are to meet with Mr. Xi even as the Obama administration is expected to use the visit to express displeasure about some of Beijing’s policies. Flashpoints in relations between the countries include U.S. allegations that China has sponsored cyberattacks on U.S. properties—charges Beijing strongly denies—and disclosures by former National Security Agency contractor Edward Snowden related to U.S. spying on China. The latter revelations have fueled Chinese backlash against foreign makers of some products.
For U.S. companies in China, thorny topics include where data may be stored, who manages it and whether the technologies on offer could help China’s military.
Such issues didn’t deter Dell, which said Thursday it would invest $125 billion as part of a new “In China, for China” strategy. That figure includes the cost of procuring components to manufacture PCs and servers in China. The company has spent close to $20 billion a year there for the past “several years,” a Dell spokesman said.
Dell also said on Thursday it was partnering with Chinese software and cloud company Kingsoft Corp. and state-owned technology conglomerate China Electronics Corp., whose subsidiary China Standard Software Co. makes a homegrown alternative to Microsoft’s Windows operating system called NeoKylin.
Kingsoft Chief Executive Zhang Hongjiang said that Dell and his company were developing a cloud-service product for China using Kingsoft’s cloud-computing infrastructure. Kingsoft will control the data, he said. Dell Greater China President Chenhong Huang said details such as who controls the data are still being worked out.
Dell’s founder Michael Dell appeared at an event in Shanghai on Thursday with Kingsoft Chairman Lei Jun to launch their collaboration.
Han Naiping, chief executive of China Standard Software, said that Dell became the first Western brand to make personal computers running his company’s NeoKylin operating system after they began a partnership in the second half of last year. Mr. Huang said 42% of Dell’s computers sold in China now run NeoKylin. Hewlett-Packard Co. also sells NeoKylin PCs in China.
NeoKylin was developed with China’s National University of Defense Technology, which is administered by the Defense Ministry, in an effort to make a Chinese alternative to Windows. Windows still dominates the China market.
In another partnership, Tsinghua Tongfang Co. said Dell is helping it develop “high-performance computing products” it doesn’t currently have, including servers and memory. Tongfang is a publicly listed subsidiary of state-owned Tsinghua Holdings Ltd., a technology conglomerate with close ties to senior Chinese leaders that is tasked with developing homegrown technologies. Tongfang makes consumer electronics, but also security gear for China’s government including metal detectors and the chips in national ID cards.
“If we are just bringing in foreign technology and slapping our brand on it, then how could we guarantee independently controllable information security?” Tongfang said in an email.
In addition to partnerships with private Chinese companies, Dell said it would collaborate with the Chinese Academy of Sciences to found a lab for artificial intelligence research.
Many of the prior tie-ups between U.S. and Chinese companies focused on China’s semiconductor industry, which Beijing has sought to beef up in the wake of the Snowden revelations. Intel Corp., for example, a year ago announced a $1.5 billion investment in Tsinghua Unigroup Ltd., a state-owned firm that owns China’s second- and third-largest chip designers, Spreadtrum Communications and RDA Microelectronics. Tsinghua Unigroup and Tsinghua Tongfang are both subsidiaries of Tsinghua Holdings.
Mobile chip giant Qualcomm Inc., which in February paid $975 million to settle antitrust charges in China, in April said it was launching a unit to help Chinese smartphone makers sell overseas.
Such deals have coincided with the increasing technical sophistication of many Chinese companies, which are no longer content to copy innovations from abroad. Huawei Technologies Co., for example, is emerging as a major developer of technology positioned to succeed today’s fourth-generation cellular networks, said Handel Jones, an analyst who tracks China at International Business Strategies, a Silicon Valley consulting firm.
“There has been a big change in the last 12 months,” Mr. Jones said. “They now are becoming very confident of their global position.”
Tsinghua Unigroup has been particularly active. It purchased a controlling stake in H-P’s China-based networking unit in May, and in July prepared a $23 billion bid to buy Micron Technology Inc.
Micron hasn’t commented on a possible acquisition, which was considered a long shot based on likely U.S. government opposition.
U.S. Tech Companies Cozy Up to China - WSJ
Dell, others team up with local players, in deals that conform to China’s desires to turn its companies into innovators
By EVA DOU in Beijing and DON CLARK in San Francisco
Sept. 13, 2015 6:47 p.m. ET
U.S. technology companies face a tough choice when it comes to doing business in China: Access to the country’s immense market increasingly requires helping local companies upgrade their skills, leading to deals that could turn erstwhile partners into entrenched competitors.
The dilemma is especially apparent in advance of Chinese President Xi Jinping’s first state visit to the U.S. later this month, a trip that likely will come with a flurry of tie-ups between U.S. and Chinese companies.
In the latest deal, computer maker Dell Inc. has begun collaborating closely with Chinese companies in sectors that Beijing deems crucial to national security, such as helping a Chinese state-owned firm develop high-performance servers, and switching more than 40% of its personal computers sold in China to a Chinese operating system co-developed with a government-administered defense school. Other technology-sharing agreements are expected to be announced before or during Mr. Xi’s visit, which includes a visit to Seattle as well as Washington, D.C.
The deals typically conform to China’s desires to turn its companies from manufacturers of others’ designs to innovators and exporters—and to reduce the country’s exposure to the security risk of relying on foreign technology.
U.S. tech companies in the past year have learned that they will suffer significant repercussions if they don’t transfer technology to China, said Robert Atkinson, founder and president of the Information Technology and Innovation Foundation, a tech policy think tank.
“Everybody is going out of their way to curry favor from the Chinese government.”
Companies such as Apple Inc., Microsoft Corp. and Cisco SystemsInc. are to meet with Mr. Xi even as the Obama administration is expected to use the visit to express displeasure about some of Beijing’s policies. Flashpoints in relations between the countries include U.S. allegations that China has sponsored cyberattacks on U.S. properties—charges Beijing strongly denies—and disclosures by former National Security Agency contractor Edward Snowden related to U.S. spying on China. The latter revelations have fueled Chinese backlash against foreign makers of some products.
For U.S. companies in China, thorny topics include where data may be stored, who manages it and whether the technologies on offer could help China’s military.
Such issues didn’t deter Dell, which said Thursday it would invest $125 billion as part of a new “In China, for China” strategy. That figure includes the cost of procuring components to manufacture PCs and servers in China. The company has spent close to $20 billion a year there for the past “several years,” a Dell spokesman said.
Dell also said on Thursday it was partnering with Chinese software and cloud company Kingsoft Corp. and state-owned technology conglomerate China Electronics Corp., whose subsidiary China Standard Software Co. makes a homegrown alternative to Microsoft’s Windows operating system called NeoKylin.
Kingsoft Chief Executive Zhang Hongjiang said that Dell and his company were developing a cloud-service product for China using Kingsoft’s cloud-computing infrastructure. Kingsoft will control the data, he said. Dell Greater China President Chenhong Huang said details such as who controls the data are still being worked out.
Dell’s founder Michael Dell appeared at an event in Shanghai on Thursday with Kingsoft Chairman Lei Jun to launch their collaboration.
Han Naiping, chief executive of China Standard Software, said that Dell became the first Western brand to make personal computers running his company’s NeoKylin operating system after they began a partnership in the second half of last year. Mr. Huang said 42% of Dell’s computers sold in China now run NeoKylin. Hewlett-Packard Co. also sells NeoKylin PCs in China.
NeoKylin was developed with China’s National University of Defense Technology, which is administered by the Defense Ministry, in an effort to make a Chinese alternative to Windows. Windows still dominates the China market.
In another partnership, Tsinghua Tongfang Co. said Dell is helping it develop “high-performance computing products” it doesn’t currently have, including servers and memory. Tongfang is a publicly listed subsidiary of state-owned Tsinghua Holdings Ltd., a technology conglomerate with close ties to senior Chinese leaders that is tasked with developing homegrown technologies. Tongfang makes consumer electronics, but also security gear for China’s government including metal detectors and the chips in national ID cards.
“If we are just bringing in foreign technology and slapping our brand on it, then how could we guarantee independently controllable information security?” Tongfang said in an email.
In addition to partnerships with private Chinese companies, Dell said it would collaborate with the Chinese Academy of Sciences to found a lab for artificial intelligence research.
Many of the prior tie-ups between U.S. and Chinese companies focused on China’s semiconductor industry, which Beijing has sought to beef up in the wake of the Snowden revelations. Intel Corp., for example, a year ago announced a $1.5 billion investment in Tsinghua Unigroup Ltd., a state-owned firm that owns China’s second- and third-largest chip designers, Spreadtrum Communications and RDA Microelectronics. Tsinghua Unigroup and Tsinghua Tongfang are both subsidiaries of Tsinghua Holdings.
Mobile chip giant Qualcomm Inc., which in February paid $975 million to settle antitrust charges in China, in April said it was launching a unit to help Chinese smartphone makers sell overseas.
Such deals have coincided with the increasing technical sophistication of many Chinese companies, which are no longer content to copy innovations from abroad. Huawei Technologies Co., for example, is emerging as a major developer of technology positioned to succeed today’s fourth-generation cellular networks, said Handel Jones, an analyst who tracks China at International Business Strategies, a Silicon Valley consulting firm.
“There has been a big change in the last 12 months,” Mr. Jones said. “They now are becoming very confident of their global position.”
Tsinghua Unigroup has been particularly active. It purchased a controlling stake in H-P’s China-based networking unit in May, and in July prepared a $23 billion bid to buy Micron Technology Inc.
Micron hasn’t commented on a possible acquisition, which was considered a long shot based on likely U.S. government opposition.
U.S. Tech Companies Cozy Up to China - WSJ
