“Here’s a list of the people who’ve been infected with my Trojan horse,” he says, working from a dingy apartment on the outskirts of this city in central China. “They don’t even know what’s happened.”

Worthwhile reading.

Not so Chinese commercial espionage, which is far from a new story. I distinctly remember in the early 1990s the Taiwanese visitor to a certain bearing manufacturing in the United States, discovered wearing shoes with magnetized metal soles to catch iron filings during a factory tour.

But Chinese commercial espionage is "evidently" well-funded and coordinated. An MI5 report, leaked to the Sunday Times, contains details of interest, including this:

A leaked MI5 document says that undercover intelligence officers from the People’s Liberation Army and the Ministry of Public Security have also approached UK businessmen at trade fairs and exhibitions with the offer of “gifts” and “lavish hospitality”.

The gifts — cameras and memory sticks — have been found to contain electronic Trojan bugs which provide the Chinese with remote access to users’ computers.

Granted, given the prevalence of virus activity and the near absence of antivirus applications in use in China, it is always possible that rogue applications find their way onto "gifts." It has also been rumored -- and I believe unproven, correct me if I'm wrong -- that applications to ease ingress by hackers have been installed unto computer hardware at certain Chinese factories.

Need I say it? if you are senior executive or assistant to such an officer in a sensitive industry or multinational, beware of strangers -- especially PLA or PSB people -- bringing gifts.

Google CEO Schmidt at Davos: 'We like what China is doing in terms of growth ... we just don't like censorship. We hope that will change and we can apply some pressure to make things better for the Chinese people.

Uh oh.

This is worse than merely shooting oneself in the foot, is it not? Direct foreign criticism of Chinese "internal affairs" declaimed to the world's elite political leadership.

One must question this move as simply more Google shadow boxing. Despite its threat to remove web filtering, Google does not appear to have done so. Similarly, a postponement is simply that. The delay of a marketing expense will have no effect on top-level cadres, other than to demonstrate weakness of resolve. Why?

Because Google can't extricate itself from China. Think of the likely effect "leaving China" on the introduction into world markets of the Nexus, the new Google phone. After all, the product itself will be manufactured in China (where else?). Apple must be jumping for joy.

(Even were Google to leave, Chinese authorities would still welcome revenues resulting from the contract manufacturing of the Nexus, but the threat of being cut off from supply would remain.)

If Google's Board believes its announcement serves to generate public pressure from foreign investors, I think it is much mistaken. Could they suffer from grandiose notions of its importance in Chinese affairs? China can do very well without Google. After all, China has its own Google: Baidu, modeled in its image.

Google is vulnerable, and in China the strong prey upon the weak without mercy. American manufacturers and even end-users, including the United States armed forces, now plainly see how vulnerable they have become to the agglomeration of manufacturing resources in China, the purported need to sell in China and the compromises that must be made to do so.

Google (GOOG.O) is investigating whether one or more employees may have helped facilitate a cyber-attack from China that the U.S search giant said it was a victim of in mid-December, two sources told Reuters on Monday.

Extraordinary -- unnamed sources. Unnamed and yet virtually identified?

The sources, who are familiar with the situation, told Reuters that the attack, which targeted people who have access to specific parts of Google networks, may have been facilitated by people working in Google China's office.

In other words, other Google employees with an ax to grind? American executives who are sick and tired of surveillance? The PR department?

Furthermore, despite Google's claim to cease filtering, it is not evident that the company has made any change in Web search filtering.

This is a strange game of cat and mouse. We know what the cat wishes to do. What exactly is the mouse doing?

The New York Times has removed or revised two quotations from an article it published on January 13, originally titled, "China's Exit Threatens China's Internet," by David Barboza, et al. The revised article, running at the same URL as the original, is entitled, "Baidu’s Gain from Departure Could Be China’s Loss." Among the quotations removed is that of Anne Stevenson Yang, whom I quoted in yesterday's post. (See post below.) Yes, that quote was there and is now gone. Along with this one: "It's the epitaph for US online involvement here."

In addition, the following quote from the original story was partially revised.

“Baidu keeps a great relationship with the government,” says Hong Bo, a consultant at 5G, a Beijing-based consulting firm. “If the government wants something removed it will do it immediately. On the other hand, everything with Google has to go through its headquarters.”

The revised article curiously allows the writer to ventriloquize the first sentence:

Baidu’s strong relationship with the government contributed to its rise. “If the government wants something removed, it will do it immediately,” said Hong Bo, a consultant with 5G, a Beijing consultancy. “On the other hand, everything with Google has to go through its headquarters.”

Other than these changes, the articles appear similar. So, why were any changes made? Why were quotes dropped?

[H/T to a friend.]

Lawyers suing China for 2.2 billion dollars in an Internet-censoring software piracy case said they came under cyberattack this week.

Attorneys at the California law firm of Gipson Hoffman & Pancione said that on Monday they began receiving "Trojan emails" crafted to trick them into opening files booby-trapped with malicious software code.

Download the original complaints filed in federal court in California.

Cybersitter v. People's Republic of China, et al.

Cybersitter v. CBS Interactive

I was thrilled to read Anne Stevenson Yang's forthright and accurate assessment of foreign involvement in Chinese media. Finally, a non-Chinese within China is willing to state the obvious to a public audience. Brava!

And what elicited the comment? Google's threat to pull out of China because of cyberattacks, originating in China, leading to theft of company intellectual property and instrusion into Gmail accounts, ostensibly belonging to users with connections to human rights movements. Don Clarke's post on the topic is worth reading.

Perhaps 30 years ago, I came into possession of a 1960's US Department of the Army treatise on China, entitled, "China: Ruthless Enemy or Paper Tiger?" It may still sit on the shelf in my library. Is Google a Paper Tiger?

Note: the company announced it was "considering" quitting the market.

These attacks and the surveillance they have uncovered--combined with the attempts over the past year to further limit free speech on the web--have led us to conclude that we should review the feasibility of our business operations in China. We have decided we are no longer willing to continue censoring our results on Google.cn, and so over the next few weeks we will be discussing with the Chinese government the basis on which we could operate an unfiltered search engine within the law, if at all. We recognize that this may well mean having to shut down Google.cn, and potentially our offices in China.

What does Google hope to gain announcing a mere possibility of "withdrawal" from China? Surely, by now, the company has accumulated enough wisdom to know that they have been on the losing end of a hopeless battle with the Party. Furthermore, the abrupt decision to end compliance with government censorship requirements is a direct assault on the leadership, akin to the jester throwing down the gauntlet at the Black Knight -- within his castle. The company cannot hope to alter the activities of its massive and muscular propaganda organ, it's vast surveillance functions, all freely exercised. Party leadership will be incensed and take appropriate action, as one might expect of them. I do not see any way back from this precipitous decision.

On the other hand, business has been tough for Google in China, partly because of the business model which they had hoped to transplant, dependent upon substantially greater freedoms of expression than the Party is willing to tolerate, even from foreign entities with clout. As a result, Baidu -- with its hand-in-glove relationship with media censors and administrators -- has eaten Google's proverbial lunch. This seems as good a reason as any for Google to surrender while appearing to save face.

]]> http://www.asiabizblog.com/archives/2010/01/video_chinas_go.htm http://www.asiabizblog.com/archives/2010/01/video_chinas_go.htm China After the Meltdown Fri, 08 Jan 2010 15:02:56 +0000 I've heard this same argument, in its various iterations, from so many people over the past 15 years that I'm not surprised to see James Chanos, a well-known short seller, join the club, even at this late date.

As most of the world bets on China to help lift the global economy out of recession, Mr. Chanos is warning that China’s hyperstimulated economy is headed for a crash, rather than the sustained boom that most economists predict. Its surging real estate sector, buoyed by a flood of speculative capital, looks like “Dubai times 1,000 — or worse,” he frets. He even suspects that Beijing is cooking its books, faking, among other things, its eye-popping growth rates of more than 8 percent.

Notwithstanding his record of contrarian success, Mr. Chanos is but another Westerner to see past the smoke and mirrors to conclude that the end is near. (If you have been reading this blog over the past eight years of its existence, you will have read of many such prognostications.) If one could only find Chinese who agree.

[UPDATE (Jan. 11, 2010): Even more - yawn! - bubble talk. I don't mean this. I mean this.]

Animation demands a large amount of upfront capital, particularly from the beginning; the cost may amount to 10,000 Yuan per minute. Later, the cost might be reduced to a few thousand Yuan per minute. However, China’s TV stations can pay very little and differ greatly. Some small TV stations may only pay 10 Yuan per minute, and the fee may increase to 80-100 Yuan per minute for larger stations. The largest China Central TV may pay a few hundred Yuan per minute.

Obscure TV stations have even asked you to pay the cost. Therefore, it can be said that you “lose a penny as you put a penny” in developing original animation. Then you may do sums, on average, we would be able to recover the investment, in theory, only when the animation was broadcasted on dozens of TV stations. In general, we are able to recover 40% of our investment through TV media.

Will the US respond in kind? Are you kidding? That would be protectionist!

Panelists:

Jonathan Dong, Head of Corporate Affairs at Nestle China
Greg Gao, Chief Consultant at Energize PR

The language of discussion will be Mandarin Chinese. No English translation is provided.

Where:The Bookworm
When: Thursday, December 17, 2009. 3:00 to 5:00 pm
Entrance fee for IABC members is RMB 50; non-members, RMB100.
(Fees cover soft drinks and light snacks.)

Reservations are required.

For more information or to register, email beijing-info (at) iabc.com or call Mr Ji Jun on 13910668932.

[Thanks to Alistair Nicholas for this information.]

[Richard Kuslan is an attorney with offices in New Haven and Norwich, focusing on immigration, commercial and IP law (www.NewHavenLawyer.US). With 30 years of experience dealing with Asian peoples, he began Asiabizblog (www.asiabizblog.com), the first China-centric business and law blog on the Internet.]

Much has been written about e-mail scams preying upon attorneys; frankly, attorneys are quite capable of protecting themselves by virtue of their professional skills. We are, after all, analysts of prose, distinguishers of detail. Alas, few of us consider ourselves technologically capable, but this is a distraction and an excuse. Attorneys who routinely scrutinize documents somehow find themselves at the mercy of online crooks who often do a shamefully bad job of covering their tracks. I believe that attorneys can and should be immediately proactive and decisive with 99.9% of all scam e-mails they receive. Do your analysis and then, in most -- should I say “all?” -- cases, press “delete.”

But what is the analysis? I have reviewed many dozen specimens, some of which have been e-mail directly to me, others passed on to me by colleagues. The analysis is far simpler than one thinks, rarely requiring knowledge of technology. However, even the technology is easier to learn than the Rule against Perpetuities. The recommended analysis follows:

1) Review the content of the e-mail for suspect indicia;
2) Check the e-mail properties for clues as to origin; and,
3) Honestly look at your own motivation for wishing to believe in the purported validity of the e-mail received.

The third prong of this test the most difficult to apply, but crucial to self protection.

CONTENT

The review of content attempts to ascertain the validity of the e-mail content itself. It shouldn't take more than five minutes. The writer is purported to be an executive of a foreign company owed a substantial debt or, in a twist, and ex-spouse with outstanding custody payments. Generally, some kind of deal is offered that is profitable to the lawyer. Is this already sounding strange to you?

Does the e-mail spend paragraphs describing the company, its business and the legal issue involved? If so, your delete finger should begin to itch. In fact, this is the setup, designed to create a sense of trust in the reader. Warning bells should ring when a stranger tells another confidential information over an unsecure method of communication.

Is the legal issue proposed the collection of a debt? Virtually all scam e-mails I have read propose collection matters. In one common scam, the purported debtor -- in existence only for the scam and quite likely the “client” himself -- pays up with a forged bank check. After attorney wires client the proceeds, the bank check comes back, unpaid, to haunt the attorney, who is now on the hook for the sum he wired plus bank fees for bounced check. Client and Debtor vanish into the night. Instead of agreeing to take a percentage, try proposing to this client an hourly basis with a hefty upfront retainer wired in cash. Better yet, don’t. You won't hear back.

Does the writer compliment you? Here is an actual example: “After a careful research, we have been able to establish that delinquents or past due accounts are settled when reputable and aggressive firm or professional(s) represents an organization in collection of debts or possible litigation that may arise thereof.” …which is why we’ve chosen you! Your vanity meter should read off the scale. A compliment from a stranger may be genuine, but may also lay the groundwork for very subtle scheming. Redouble your suspicions!

Is there extensive use of four and five syllable words, such as actualization, implementation, delinquency, and sentences that run on for 50 words or more? This is an attempt to appeal to those who inhabit the jungle of legal jargon. Business executives hardly write at all and when they do, they do so in bullet points of no more than 10 words of two syllables each. Your delete finger should now be hovering over the delete button.

If the writer offers a substantial retainer, one can virtually disregard the rest of the e-mail immediately. Generally, clients do not wish to pay all. The delete finger should feel heavy now…
Are you addressed by name? If you are addressed only by "Counsel," or not at all, the e-mail is intended for a mass audience. Hit the delete button.

Does the e-mail purport to come from China? China is hot and ripe for scam-ploitation. Chinese rarely, if ever, reach out to people personally unknown, untouched and unseen for representation. Delete.

Is the claim made that the writer came across the attorney's name in a directory in which the attorney isn't listed or doesn’t exist? Delete.

Does the writer claim to have contacted the attorney once before, when there hasn't been prior contact? Delete.

In a lengthy e-mail, are there significant errors of grammar and/or spelling? Delete.

EMAIL PROPERTIES

The review of e-mail properties aims to decipher the provenance of the e-mail and whether that product agrees with the e-mail contents. As an example, an email may purport to originate from a company in Shanghai, but upon examination the e-mail itself likely originated from a server in, say, Singapore. For those with a basic knowledge of world geography, this should not make sense. Perhaps you should look at an atlas once in a while.

Does the sender claim to be an executive of a large corporation, but have an unpersuasive personal e-mail like smilingbob@yahoo.com? Delete.

Does e-mail content or e-mail address (e.g. chuang@cashwithasmile.com) lead to a good looking website? Anyone can build a website. At this point several simple tasks should be performed, taking less than five minutes of your time:

1) Input the website address into Google maps and see what comes up. I once discovered the London address of a false company to house a falafel restaurant.

2) Check the website whois information, i.e. to whom the website was registered and compare it to the information on the e-mail. If inconsistent, delete. If the whois info is private, delete. To check whois information, see www.whois.net.

3) Those wishing to pursue further research – are there any by now -- must look to third-party references, such as business directories.

For more detailed analysis, you will need to learn about Internet Headers. You may discover that the email “from Seoul” actually originates from a server on the island of Malta. This webpage should be required reading for anyone who uses e-mail.

YOUR OWN MOTIVATIONS

Your response to a scam email is a declaration that you are a mark; that your e-mail is valid; and that you are vulnerable or dumb enough to be a potential target.

Who doesn't feel the pressure of business? You, just like everybody else, need and want the business. It’s only natural. But for your own sake, you must begin with the premise that e-mail from persons unknown offering profitable deals from overseas is guilty until proven innocent. And they are rarely, oh so rarely, so.

Click here to download file.

Robert H. Hu is Associate Professor of Law and Director of Sarita Kenedy East Law Library at St. Mary's University School of Law in San Antonio, Texas. He has an LL.B from Beijing University (China) and a LL.M (American law) from University of Illinois at Urbana-Champaign (U.S.A.) Bob teaches a course of Advanced Legal Research, while his own research focuses on U.S. legal research and Chinese intellectual property law.