December 11, 2003 10:02 AM PST

China Wi-Fi codes to be controlled by 11 firms

Companies that want to adopt the new China-only wireless encryption standard will have to acquire that technology from just 11 designated Chinese companies.

These 11 companies include PC manufacturer Legend Holdings and telecommunications equipment manufacturer Huawei Technologies.


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China recently announced a new policy that requires all companies that import and sell Wi-Fi equipment to use an encryption standard called Wired Authentication and Privacy Infrastructure (WAPI), which was developed by China and is not used anywhere else. The policy came into effect Dec. 1.

Requiring foreign Wi-Fi equipment manufacturers to work with Chinese partners to acquire the necessary encryption standard has raised a host of fears among foreign companies. These fears range from the loss of intellectual property to price gouging, reported the Asian Wall Street Journal.

Foreign companies are worried that they will have to reveal considerable technical information to Chinese partners that claim to need it to incorporate the encryption technology. These companies will then get access to key intellectual property that could, potentially, be stolen.

Alternatively, Chinese companies could drag their feet about sharing the technology in order to give their own products a head start in the market.

Finally, with just 11 companies in possession of the new Chinese encryption standard, these companies could ask for very high fees in exchange for the technology.

U.S. embassy officials have raised these issues to the Chinese government and to U.S. equipment manufacturers as well as officials from other governments involved.

The Dec. 1 deadline was set by the Standardization Administration of China, which manages standards in various industries in the country. Support for WAPI is not included in current or upcoming security specifications, such as Wi-Fi Protected Access or 802.11i, developed and enforced by industry groups the Institute of Electrical and Electronics Engineers and the Wi-Fi Alliance.

WAPI is to be used with Wi-Fi standards in the 2.4GHz radio band, according to a notice from the Standardization Administration of China.

WAPI adds yet another security specification that companies will have to consider as they begin installing Wi-Fi networks, adding further confusion to the market, according to security experts. By prohibiting gear that does not use WAPI, the Chinese government is throwing an obstacle in the way of manufacturers looking to enter the Chinese market, they say.

In the third quarter, the Asia-Pacific region had the second-largest market share for sales of Wi-Fi gear worldwide, at 18 percent. North America was No. 1, with more than 60 percent. China was one of the top three countries in the Asia-Pacific region, according to research firm Synergy Research Group.

China is pushing domestically developed technical standards on a wide range of technology from DVDs to third-generation mobile phones, in part to avoid foreign royalties and increasingly to compete with international standards.

CNET Asia staff reported from Singapore. CNET News.com's Richard Shim contributed to this report from San Francisco.

 

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