VZCZCXRO8612
RR RUEHCN RUEHGH RUEHVC
DE RUEHGZ #0648 2680824
ZNR UUUUU ZZH
R 250824Z SEP 06
FM AMCONSUL GUANGZHOU
TO RUEHC/SECSTATE WASHDC 3884
INFO RUEHOO/CHINA POSTS COLLECTIVE
RUCPDOC/USDOC WASHDC
RUEAIIA/CIA WASHDC
RUEKJCS/DIA WASHDC
RHHMUNA/HQ USPACOM HONOLULU HI

UNCLAS GUANGZHOU 030648 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: KIPR ECON ETRD WTRO CH
SUBJECT: U.S. Industry Promotes Transparent Standards System in 
Shenzhen Symposium 
 
(U) This document is sensitive but unclassified.  Please protect 
accordingly. 
 
¶1. (SBU) Summary and comment: Representatives from Intel, Qualcomm, 
and Cisco encouraged China to adopt a transparent, market-oriented 
standards development process during a DOC-hosted seminar on 
standards and IPR in Shenzhen on September 21.  Chinese industry 
attendees, who have a generally sophisticated understanding of 
standards issues, were supportive of the U.S. approach.  Comment: We 
are encouraged that Chinese companies not only showed up to the 
event but also spoke positively of an open standards-setting system. 
 Domestic companies that are interested in competing internationally 
seem to be in favor of an industry-led approach.  End summary and 
comment. 
 
¶2. (SBU) The U.S.-China Standards and IP Symposium in Shenzhen, 
co-hosted by the U.S. Department of Commerce (DOC) Trade 
Facilitation Office and the Standards Administration of China (SAC) 
- with support from the U.S. Embassy in Beijing and the U.S. 
Consulate General in Guangzhou - replayed many of the same themes, 
i.e., the relationship between standards and IP and the benefits of 
the U.S. approach, as at a similar event in Beijing on September 
18-19.  (Note: Chinese academics and officials are currently 
debating whether to adopt a compulsory licensing regime.  End note). 
 The Consul General opened the event, stating that an open 
standards-setting process that protects the rights of IP holders 
would benefit China by fostering innovation and encouraging 
investment. 
 
U.S. Industry Makes the Case 
---------------------------- 
 
¶3. (SBU) Earl Nied, Intel's Program Director for Standards and a 
member of the American National Standards Institute, pointed out 
that the United States has a standards system that is voluntary and 
led by industry.  Indeed, U.S. law requires federal agencies to use 
"voluntary consensus standards" for regulatory and procurement 
activities. The U.S. government imposes mandatory standards only in 
cases that affect public health and safety and does not used them to 
protect domestic industries. 
 
¶4. (SBU) Greg Shea, President of the United States Information 
Technology Office, an industry association, said China is generally 
moving in the direction of an open, international-based standards 
system.  However, China's standards-setting process is still 
characterized by a "strong government presence," lack of 
transparency and inter-agency coordination, and protectionism. 
Foreign companies are limited to observer roles.  Shea encouraged 
more Chinese participation in global standards bodies. 
 
Audience Engaged on the Issues 
------------------------------ 
 
¶5. (SBU) A case study session focused on the benefits and drawbacks 
of joining standards development organizations (SDO) for a company 
that has a new technology.  The panelists - among them Intel's Earl 
Nied; Cisco's Gil Ohana, Director of Antitrust and Competition; and 
Qualcomm's Kent Baker, Director of Global IP Policy and Compliance - 
said that issues to consider include the duration of the development 
period, the SDO's licensing requirements, and the potential benefits 
of going it alone.  Generally, they said, companies benefit by 
gaining market share when their technologies are used in new 
standards. 
 
¶6. (SBU) Audience participants included small business owners and 
representatives of large domestic and foreign-invested companies. 
Some audience members noted that the potential benefits of SDOs 
include the learning opportunities to be gained from other members 
and the increased brand recognition that may result.  The drawbacks 
include the possibility of no royalty payments and the costs of 
joining the organization.  The important point, the panelists noted, 
is that the company can choose which route to take.  Huawei's 
Director of Industry Standards said that Huawei is involved in more 
than 130 standards-setting bodies, approximately half of which are 
domestic. 
 
¶8. (U) Embassy Beijing has approved this cable. 
 
GOLDBERG