Chinese government, cyber security law to take effect in June

There is an emergency in the domestic software (SW) companies`` export to China as Chinese cyber security law will take effect from June this year.


A spokesman for the People``s National People``s Congress (NPC) in Fujian, China, announced on March 14, that the Chinese SW company Beijing VRV Software Corporation Limited posted on the portal website, Sohu.com that Chinese government will implement cyber security law within this year. ‘China is a very large Internet country and faces a variety of challenges’ stated a representative of Fujian.

The law will be enforced as of June 1, and the main point of the law is to protect the privacy of the Chinese people. It is the reason that it prevents the overseas hackers’ organizations from attacking and infiltrating the Chinese information infrastructure. However, it is known that foreign IT companies operating in China are required to disclose proprietary source code in order to prove that hackers cannot damage the product. The source code is a SW programming language that describes computer programs that produce SWs or chips.

Korean SW companies are taking measures since the law has been approved last year. Hancom is being sold in China by applying Hancom web office technology to Chinese brand products under technology alliance with Chinese software company Kingsoft. Hancom representative said, ‘We reached to the conclusion that there is no impact on the allocation of profits to Chinese companies. But we are concerned about sharing original technology to make a new business.’ Tmaxsoft is established a joint venture in China and doing business in Chinese market. A company representative said, ‘We have sent R & D personnel to China to take situation under control and source code disclosure is not necessarily up to date, but technology leakage can occur in the case of management is neglected.’

Metabuild representative predicted, ‘If the source code is the life of a SW company, the company that has established a joint venture will open only the old version or peripheral sources without opening the core source, but the Chinese government may not accept it. On the contrary, China has developed its own software (using source code), and there is room for Korean market commercialization and re-commercialization.’

Embedded SW industry also expressed their concern. MDS Technologies, which has recently set up a Chinese branch, believes it will be difficult to do business in China in the case of the source code disclosure. Ssenston representative said, ‘If the source code needs to be released in addition to the THAAD issue, it will be difficult for us to enter the Chinese market. It``s rather a good opportunity to target Japan although Chinese market has potential but the risk is also huge in Chinese market’.

The commercial SW corporation recognizes that the Chinese Cyber Security Law has not specified what the ‘security report’ demanded by foreign companies requires specifically. However, it seems that there is a possibility that a Chinese private company will ask for the disclosure of the source code even if the Chinese government does not take the initiative. According to the association, ‘China basically secures source technology and focuses on nationalization. However, if China were to export its assets to foreign countries, it would not be a problem in the normal trade law by applying the same standard when exporting its own software.’


By Shim Hwa-yeong, Lee Gyung-tak dorothy@dt.co.kr


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