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» VIEW ALL POSTS Nov 13 2007   9:47AM GMT

Tech’s tangled Web in China



Posted by: Beth Pariseau
Tags:
Strategic storage vendors

Disclaimer: I do not claim to be an expert in international politics.

That said, let me dive right in to that subject.

We know this much is true: China is a force in the world to be reckoned with, and that only becomes a trickier proposition with every passing day. Because while we enjoy their cheap labor and cost-effective manufacturing processes in this country, the behavior of the Communist regime in China is often, er, problematic for citizens of Western democracies.

We also know this much is true: inexorably, inevitably, tech companies are following the money straight to Beijing. Cisco announced it plans to invest $16 billion in China; EMC recently committed $1 billion through 2012. U.S. networking player 3Com was bought out in part by its Chinese partner, Huawei. And while there are clearly strategic reasons for these investments, companies doing business in China are also running up against the ethical conflicts mentioned above.

Perhaps “running up against” isn’t the correct term. Perhaps “crashing up against” or “clashing with” would be more appropriate. It’s a rare and fascinating thing to watch the worlds of morality and business intersect in this way.

Cisco is the prime example. Shareholders at its Nov. 15 meeting are expected to bring the China issue to the forefront of debate.

One proposal, from Boston Common Asset Management LLC , has been on Cisco’s ballot before and attracted significant support at last year’s meeting.

Boston Common is asking Cisco for a report on how it could reduce the chances of its equipment being used to repress privacy or freedom of expression. “What kinds of questions are they asking when they go into these markets? Are they even asking these questions?” says Dawn Wolfe, a Boston Common social research analyst.

Boston Common’s proposals attracted support from 19 percent of voters at last year’s meeting. “That’s a tremendous amount for a human rights proposal,” Wolfe says.

If it’s not careful, Cisco might repeat the mistake of Yahoo, which has been taking no shortage of heat for its role in assisting the Chinese government in imprisoning two political “dissidents” 10 years each for running news stories without permission.

In fact, even if it is careful, Cisco’s equipment could still be at the center of practices considered nefarious in the U.S. (and, well, in most places). Seagate’s subsidiary Maxtor found this out the hard way recently when Chinese subcontractors inserted malware into Maxtor external hard drives bound for Taiwan, containing trojan horses which automatically upload saved information to Web sites in Beijing.

On top of the ethical issues there is also the matter of international espionage. It sounds like something out of a hyperdramatic James Bond scene, but North American technical trade secrets falling into Chinese hands has also been a very real fear expressed by some in the tech market after rumors surfaced earlier this year that Seagate was about to be acquired by a Chinese company.

And yet here we are between the proverbial rock and hard place. China’s not going away. The Chinese economy isn’t going away. But unfortunately neither are the political brambles snagging U.S. companies chasing Beijing’s business. Some people argue that the advancements afforded by economic prosperity  could bring China closer to something resembling acceptable human rights in Western eyes. Others point out that’s exactly the argument made by companies who continued to invest in apartheid South Africa.

I’m wondering why Cisco, EMC et al, can’t invest just as heavily in some kind of social activist group, Human Rights Watch, maybe, or Amnesty International, to try to counterbalance the investments that might encourage China’s human rights abuses. I guess they’d argue that’s not their responsibility.

But it might be the right thing to do anyway.

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  • pete
    China is simply preparing for war. This is obvious. Our fear to call them on it and lack of preparation will be our death. China is trying to poison our kid, hack into government computer, secretly producing nuclear attack subs, vast increases in military spending, using our tech to improve missles and nuclear bombs. These acts combined with their communist manifesto and an excessive supply of young men of fighting age spells trouble ahead.
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