Computing

Report: China's Influence On Global Standards Reaching Critical Levels?

China is no longer content with just being the world's pre-eminent manufacturer: it is increasingly active in the development of global technology standards, Deloitte & Touche LLP finds in a study released today.

The report, "Changing China," details how China's standards initiatives will shape global competition in the technology, media and telecommunications (TMT) sector for years to come. China's current position as the leading consumer and producer of many technology products — along with its healthy long-term growth prospects – puts it in a strong position to influence standards in its own market, as well as the global markets. As China's standards become more widely accepted, Chinese firms will increasingly direct the global technology sector.

Deloitte identified four practical strategies for technology firms to consider as China's technology standards develop:

– Collaborate with standard setters.

– Compete selectively, focusing on areas where standards are harder to mandate.

– Innovate specifically for the Chinese market.

– Seed emerging markets to encourage growth and establish early control.

From operating systems and software applications, to storage media, wireless communications and satellite positioning, Chinese government agencies and companies are working to shape new technology standards for economic advantage. Deloitte expects Chinese manufacturers to begin by building a critical mass of support at home, then exporting their technologies to emerging markets such as Southeast Asia and the Middle East.

Examples highlighting China's impact on standards include:

Operating systems:

– The Chinese government recently announced a major commitment to Linux and announced it was drafting a new "standard" specifically for the Chinese market that might be made compulsory for all IT vendors and service providers.

– The Chinese software industry is still in its infancy and China wants to source software or create its own software that is affordable to the masses.

RFID:

– China established a working group to draft and develop national standards for RFID tag technology. Some reports indicate the group is adhering to international standards, while others suggest the group is planning to go its own way. An incompatible RFID standard could pit the interests of China's emerging IT industries against the interests of major purchasers of Chinese products.

EVD:

– Chinese companies are trying to promote a successor to the DVD optical disk standard, called Enhanced Versatile Disc (EVD), which has better sound and picture quality than DVD.

– Chinese companies are constrained by hefty DVD royalties, which range from $15 to $22 on players that today often retail for less than $60. A consortium of China's leading makers of DVD players holds the EVD patents and collects royalties.

Audio video coding:

– China is developing its own standard technology for compressing audio and video. The new standard, calls AVS, is competing with MPEG-4 and H.264 to replace the current worldwide compression standard, MPEG-2.

– EVD is currently based on MPEG-2, but a switch to AVS is expected – allowing Chinese manufacturers to produce state-of-the-art video players based entirely on Chinese technology standards.

Cellular networks:

– China has its own globally approved standard for 3G, and as the world's largest market for mobile communications, is well positioned to take a lead role in defining the 4G standard.

Satellite positioning systems:

– China has recently chosen Europe's Galileo system over the U.S. military's Global Positioning System. The push into satellite positioning systems has significant commercial and geopolitical ramifications.

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