Tech Groups Object to China's Indigenous Innovation Policies

New procurement rules for Chinese government agencies shopping for computers, software, telecommunications and green technology require that products contain intellectual property developed, owned and registered in China.

Google isn't the only American technology company upset with policy in China. A number of tech associations are complaining that new Chinese procurement rules essentially lock American companies out of significant business opportunities with the Chinese government.

In November, China instituted a catalog of products that receive significant preferences for procurement by Chinese government agencies. For inclusion in the catalog, products must contain intellectual property developed, owned and registered in China. Industries initially impacted by the rules include computers, software, telecommunications and green technology.
"With these policies, China is implementing a market-restrictive program which runs counter to the spirit of the free trade commitments made by President Hu," Robert Holleyman, president and CEO of the BSA (Business Software Alliance), said in a statement. "These restrictive procurement policies not only hurt U.S. businesses, but also reduce China's access to innovative, world-class technology."
In response to the new rules, in late January the BSA joined 18 other industry trade associations in sending a letter to various U.S. officials asking them to make the issue a strategic commercial priority and to address efforts by the Chinese government to limit competition by non-Chinese companies in all bilateral and multilateral meetings and forums. The letter was sent to Secretary of State Hillary Clinton, Treasury Secretary Tim Geithner, Commerce Secretary Gary Locke, Attorney General Eric Holder and U.S. Trade Representative Ron Kirk.
"For several years, the Chinese government has been implementing indigenous innovation policies aimed at carving out markets for national champions and increasing the locally owned and developed intellectual property of innovative products. We are increasingly alarmed by the means China is using to achieve these goals," the letter stated.
The letter specifically requested that "your agencies make this issue a strategic priority in your bilateral economic engagement with China; develop, in consultation with the business community and like minded foreign governments, a strong, fully coordinated response to the Chinese government; and raise this issue with your Chinese counterparts in all appropriate multilateral and bilateral meetings and forums."