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China: More hype than hope?

Despite the rush of U.S. high-tech companies, readers think China's booms is more hype than reality, a NEWS.COM Poll shows.

Is China a technological gold rush waiting to happen? Or is it a risky, problematic quagmire that the computer industry should approach with utmost caution, if at all?

According to respondents to the latest NEWS.COM Poll, the hazards of wiring China outweigh the hype surrounding the vast potential market. By a lopsided margin of 81 to 19 percent, respondents answered the question "Will the market match the hype?" with a resounding no.

Readers cited diverse reasons for their pessimistic views, including relatively low per-capita income and literacy rates, the challenge of designing software for the Chinese language, and difficulties in dealing with the Beijing government.

Readers disagreed over which strategies might work for U.S. comapnies in China. "Companies should look at it only as a short-term boom for themselves," one reader wrote. "I believe the Chinese government will get what it can from foreigners in terms of technology transfer and then, when they've got their R&D in place, they'll start trying to corner the IT market for the local manufacturers."

But another suggested that overcoming obstacles to the Chinese market will require above all else patience.

"Companies who wish to break into the sector will find at first they will be spending hundreds of millions of dollars before ever seeing a penny returned, much like the Internet today. The true winners will be the long-term players, with a full support structure within China itself. If they don't do that, they might as well not attend the party. I would say 5 to 10 years minimum."

The most frequently cited obstacle in the way of tech profits was the lack of disposable income among the Chinese people. Readers noted that per-capita income in China is only a fraction of what it is in America or Europe. One suggested that a Chinese consumer faced with spending a year's salary to buy a PC would probably pass up the opportunity.

Readers came down on both sides of the government question. While some respondents thought the Chinese government would welcome technological investment to improve the country's economic situation, others said a repressive regime will do what it can to prevent its populace from becoming wired.

"I see computers doing to China what they did to Eastern Europe and Russia," one reader wrote. They will "help in breaking down the communist stranglehold."

"This is something the Chinese government fears, and they will fight it tooth and nail," he added.

See the following page for readers' explanations of their votes.

Competing with theft and espionage
China is looking for one thing: technology transfer to them. They are conducting the most aggressive campaign of industrial espionage the world has ever seen to steal this technology now. The only companies that will get contracts will be those that agree to transfer technology. Once China has the technology and the new manufacturing plants, then we will have to compete against them. In effect, we are helping to create the next generation of companies that will be our key competitors. There will be no winners in this. If anything the only winners will be those companies that do not get contracts there.
--Anonymous

The soul of China under socialism
Economic growth rates in China are running into ceilings all over the place. There is no stable, rational macroeconomic policy. Stalinist power centers still distort the free flow of money. What's more, 750,000,000 and rising poor, untrained peasants are not on the fast-track to prosperity. They're still hoping for tractors. While it's true this segment of the population has seen a rise in the standard of living as a consequence of the removal of ridiculous Maoist collectivist policies, these reforms have long since reached their beneficial plateau.
--Justin Thornton

China will go for the bottom line
It's inevitable that China will go for developing its IT market because there is a buck to be made there. However, U.S. and foreign companies should look at it only as a short-term boom for themselves. I believe the Chinese government will get what it can from foreigners in terms of technology transfer and then, when they've got their R&D in place, they'll start trying to corner the IT market for the local manufacturers which the government and/or the officials themselves are usually invested in. The Chinese government knows all about protecting its interests, and I believe this is the ultimate reason for all the restrictions it imposes on practically all aspects of life in China--social, political, and economic.
--Jose A. Nakpil Jr.

Chinese growth lies ahead
I think that strong financial growth is an exciting prospect in China. With the reinclusion of Hong Kong into its boundaries, it has the international connections and markets to activate the growth.
--Peter Hastings

Believe the hype
I think that the market will match the hype. It may not be soon, but it will eventually. My reasoning is because there are just so many people in China at the moment and if each person in China were to purchase a 50-cent floppy disk, you would have sales in the billions. Now imagine that with PC sales. Even if you get only 25 percent of the population in China purchasing PCs, your sales would be incredible.
--Jonathan Luong

China wants to become post-industrial
Market demand for high-technology products will continue to accelerate in China. The appropriation and use of advanced technology will compress the time that hitherto would have needed to have been consumed for development if this technology did not exist. The Chinese are acutely aware of the enormous gap between the state of their economy and further social and political development vis-a-vis the post-industrial countries. They are most concerned now of bridging this gap--in so doing, they are willing to allow foreign companies the opportunity for growth, as China needs this technology and the transferance of skills and knowledge.
--Alan Skillman

Government doesn't want a wired public
China's population is still repressed by the government. Personal computers will allow too much freedom and weaken the government's hold on the control of people's minds. Until the government changes, all PC sales will be strictly controlled and limited. I see computers doing to China what they did to Eastern Europe and Russia--help in breaking down the communist stranglehold. This is something the Chinese government fears, and they will fight it tooth and nail.
--Anonymous

A "primitive" language will stymie the market
Chinese have had the most primitive language system in the world for thousands of years, then they never tried to make a change, unlike Japan or Korea. The language system is real block in any practical, everyday application of computing in China.
--Sigold

Poverty does not a high-tech market make
Keeping in mind that the majority of the people in China earn one tenth the salary an average office clerk earns (around $100 to $200 per month), it's logical to think that they simply can't afford a PC. It would cost them a year's salary.
--Ivan Chan

China will pay off--in five or ten years
Yes, China will fulfill its economic promise for the technology sector. However, I do believe there are many hurdles towards this, and companies who wish to break into the sector will find at first they will be spending hundreds of millions of dollars before ever seeing a penny returned, much like the Internet today. The true winners will be the long-term players, with a full support structure within China itself. If they don't do that, they might as well not attend the party. I would say 5-10 years minimum.
--Phil Bennett