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Wechat Article: How Can China Win the Sino-US Technology War If the Chinese Academy of Sciences Is in Constant Trouble?

On June 15, 90 out of 180 researchers from the Institute of Nuclear Energy Safety Technology of the Hefei Institute of Material Science, Chinese Academy of Sciences quit their job on the same day. The news topped the search results in China for a number of days. The Chinese Academy of Sciences website announced that Vice Premier Liu He was urged to launch an investigation into the incident. On July 17, the party cell of the Chinese Academy of Sciences formed a special task team and arrived at the Hefei Institute for an on-site investigation. The initial public information suggested that the incident was related to the former head of the Hefei Institute because most of the researchers went to join him at a different nuclear energy and technology research institution called the “Frontier Development of Science (中科凤麟 http://www.fds.org.cn).” Tencent posted a question asking for comments on why 90 scientists left the Hefei Institute. One of the answers received most of the “likes.” It stated, “There have been no scientific research achievements there even though the institute has a big name. All you do is flatter other people and run unrelated chores including playing volleyball with the boss. Front-line researchers who want to display their talents don’t have the opportunity. People are sidelined if they do not cater to the leadership. Those who couldn’t stand it all left.”

In recent years, there have been an increasing number of research institutions that have not been able to retain talented people. People often complain about receiving low pay and benefits, lacking career advancement, working under high pressure, having long working hours, and dealing with complicated guanxi (inter-personal networks) and bureaucracy. According to the data from the Minister of Science and Technology, China’s total R&D investment in 2019 was 2.17 trillion yuan (US$0.31 trillion). This accounted for 2.19 percent of GDP, which is roughly equivalent to the EU average. However there have been increases in news reports on mishandling and waste of the R&D funding as well as excessive overhead, which is allocated to support a multi-layer bureaucratic system.

A Wechat article stated that, as Huawei is battling with an Eight-Nation Alliance, the failure rate of rocket launches is significantly higher than it was in the prior year and the U.S. could block jet engine purchases. People are therefore concerned about how China can win the Sino-US technology war if the Chinese Academy of Sciences is in constant trouble.

Source: Wechat, July 21, 2020
https://mp.weixin.qq.com/s?__biz=MzA3NzIxNzI4Mw==&mid=2671013850&idx=2&sn=cedd23c72e121395e92dc42a365c79b1&chksm=8595a4b6b2e22da0d34de58461f97316196f5eced680c6ce0236c61143002988e43daa8db0ed&scene=27#wechat_redirect

Top Apple Supplier Foxconn to Invest $1 Billion in India

Well-known Chinese news site Sina (NASDAQ: SINA) recently reported that, per a strong request from Apple, its top supplier Foxconn is about to invest US$1 billion in Southern India to expand it manufacturing capacity. With the trouble of trade disputes between China and the United States, as well as the coronavirus impact, this is part of Apple’s quiet plan of moving its manufacturing center out of China. According sources familiar with the plan, Foxconn will establish a new factory in Sriperumbudur – 50 kilometers from Chennai. The factory will mainly be used to assemble the iPhone XR. The investment plan will create around 6,000 new jobs. Some of the other iPhone models currently made in China will move to this new factory as well. Currently Foxconn already has some capabilities in India  to assemble low-end iPhones. Foxconn refused to comment on any news regarding its customers and their products. Apple did not respond to this report either.

Source: Sina, July 12, 2020
https://finance.sina.com.cn/stock/s/2020-07-12/doc-iivhvpwx4949394.shtml

LTN: China Published Draft Data Security Bill

Major Taiwanese news network Liberty Times Network (LTN) recently reported that, in addition to passing the Hong Kong National Security Law, China’s 13th National People’s Congress also passed a draft Data Security Bill. According to the official draft version online, the proposed new law may require foreign companies operating in China to surrender operational data obtained outside China or face a fine or closure. Until August 16, the draft is currently seeking public opinion. The new proposed data law was drafted under the name of protecting “important data.” It has a broad definition of data whose breach can cause damage in areas of national security, economic security, and social stability. The proposed draft is planned to become law in 2021. The law may also ask foreign companies operating in China to provide information related to “network security.” Experts expressed the belief that the government is, for the first time, seeking an “Extraterritorial effect,” which is designed to cancel out a similar power U.S. laws sometimes have. It also authorizes the government to define what “important data” is. According to the proposal, individuals and organizations operating outside China may also be covered if their activities harm China’s national security or public interests.

Source: LTN, July 9, 2020
https://news.ltn.com.tw/news/world/breakingnews/3222500

Lianhe Zaobao: Intel Put Supplying Chinese Manufacturer on Hold

Singapore’s primary Chinese language newspaper Lianhe Zaobao recently reported that, in order to comply with the U.S. government’s new export restrictions, Intel has put supplying Chinese manufacturer Inspur Group on hold. Intel explained in an announcement that the move was solely to ensure that U.S. laws are followed. Inspur Group is China’s largest computer server manufacturer and is ranked number three in the world. It is a large customer of Intel’s and Inspur’s entire product line of families uses Intel processors. Intel’s decision formed a strike on Inspur’s future, causing its stock to fall five percent within a day. The U.S. Department of Defense established a 20-company list not long ago identifying Chinese companies either owned or controlled by the Chinese military. According to new U.S. regulations, these companies are banned from obtaining advanced U.S. technologies. The list includes both Huawei and Inspur. Inspur manufactures both traditional servers and Artificial Intelligence (AI) servers.

Source: Lianhe Zaobao, July 3, 2020
https://www.zaobao.com.sg/realtime/china/story20200703-1066076

Samsung Started Moving Monitor Manufacturing Lines to Vietnam

Well-known Chinese news site Sohu (NASDAQ: SOHU) recently reported that Samsung just announce that it will move its computer monitor manufacturing facilities from China to Vietnam. Vietnam’s state-run newspaper Vietnamese Youth confirmed the news. Most of Samsung’s Chinese manufacturing capabilities will be relocated to its HCMC CE Complex (SEHC) factory. Samsung expects to complete the move by the end of 2020. Samsung is currently Vietnam’s largest foreign investor, with a total investment value of US$17 billion. The monitor manufacturing move will turn Vietnam into Samsung’s largest monitor supplier in the world. According to U.S. researcher IDC, starting with the first quarter, Samsung held 34 percent of Vietnam’s 24 inch or above monitor market. With the growth of the demand on large screen monitors, the latest move will significantly benefit the region on new monitors.

Source: Sohu, June 20, 2020
https://www.sohu.com/a/403096949_161062

HK01: Huawei May Be Planning a 50 Percent Cut in Workforce in July

Popular Hong Kong new online media HK01 Network recently reported that, according to unverified internal sources from Huawei, the company is planning a mid-July announcement that it will cut its workforce in half. The total employee headcount will be reduced from around 190,000 to around 100,000. The recently expanded sanctions by the United States against Huawei may significantly cut off Huawei’s critical supply chain and may cause fatal damage to the company. Some senior Huawei employees said a large number of retirees decided to cash out half of their Huawei stocks and keep only the other half. The news triggered a wide discussion in the Chinese Internet community. Most had doubts about the news, since the drastic layoff could result in social stability issues. The Chinese government may not want to see such a destabilization move and may intervene. According to Huawei’s 2019 Sustainability Report, the company did have 188,000 employees by the end of 2018, among whom are 28,000 overseas employees. Huawei has kept quiet on this news and has not released any official response.

Source: HK01, June 15, 2020
https://bit.ly/2YUt9RF

China Mandates Real-name Registration for Online Literature

China’s online literature has grown rapidly in recent years. According to the “2019 Online Literature Development Report” that the Chinese Academy of Social Sciences (CASS) released in February, the number of online literature users has reached 455 million. Fifty percent of users are online readers; the number of online authors has reached 17.55 million.

The official Xinhua News Agency reported on June 15 that China’s National Press and Publication Administration (NPPA) issued a “Notice on Further Strengthening the Administration of Online Literature Publishing.” The Notice demands “rectifying the order of the online literature industry, strengthening the management of online literature publishing, and leading the online publishing units with a correct publication orientation.”

The Notice requires that online literature publishing units establish and improve content review and the approval mechanism. It strictly regulates the posting and publishing behavior and enforces the “real name registration for online literature creators.” Online publication platforms are told to be explicit in exhibiting posting rules and service agreements.

Source: Central News Agency, June 16, 2020
https://www.cna.com.tw/news/acn/202006160103.aspx

A Xi’an Company Banned the Use of the Apple iPhone

Well-known Chinese news site Tencent News recently reported that a company in the City of Xi’an just issued a company-wide ban on the use of the Apple iPhone. Any company employee found using an Apple iPhone will be fined six months’ worth of merit pay, which will be directly deducted from payroll. In the meantime, if an employee buys a Huawei cellphone, the company will award RMB 100 (around US$14). The company also pays any employee RMB 1000 (around US$140) for a domestically made car purchase. The story went viral online among Chinese netizens. It triggered a heavy debate on what is the right take on American products. However, not long ago, Apple iPhone 11 sales ranked among the top two across several major Chinese online retailers. It shows that Apple iPhones are widely recognized among Chinese consumers. Among the online discussions of the event, the population appears to be very divided. Many suggested their own companies had similar policies but they may not be published. Some suggested the iPhone buyers should be fired directly. However, a large number of people thought the fine was too extreme, and some even suggested that the fined iPhone buyers sue the company. Technical netizens also pointed out that Huawei products also use American technology.

Source: Tencent News, June 8, 2020
https://wxn.qq.com/cmsid/20200608A01CVW00