China's Trade Status Change to Spur E-Commerce

SAN MATEO (05/26/2000) - IT vendors and companies looking to do business over the Internet in China generally welcomed the U.S. House of Representatives vote in favor of approving permanent normal trade relations (PNTR) with China last week. The vote passed 237-197, having required 218 votes to go ahead, and is expected to pass the Senate.

The biggest impact will be felt by high-tech suppliers of technology as China builds out its network infrastructure. Until that infrastructure is in place, however, companies eyeing e-commerce opportunities in China will have to wait a few years, analysts said.

"China is getting its infrastructure into place -- wireless particularly -- but they are years behind what you find in Europe," noted Dave Taylor, founder of E-Market Holdings, an e-business consulting firm, in Stamford, Connecticut.

Web sites in China have just a bare amount of corporate information and do not offer catalogs.

Hardware suppliers, however, are already seeing big dollar signs as they eye the Chinese market.

Qualcomm is hoping that China implements the company's Code Division Multiple Access (CDMA) mobile telephony technology to connect the nation's more than 1.2 billion people.

"[The approval of PNTR] is good for all U.S. companies doing business in China today and also serves to provide a level playing field for U.S. companies [doing business in China] with respect to their competitors in Europe, Japan, and Korea," said Christine Trimble, a spokeswoman at Qualcomm.

The U.S. high-technology sector has been lobbying Congress hard for approval of PNTR for some time, as China is likely to join the World Trade Organization before the end of this year.

The Semiconductor Industry Association said that PNTR represents a huge opportunity for the chip industry because China's annual semiconductor market is valued at $8 billion and, according to analysts, is likely to become the second-largest global market by 2010.

Critics of granting PNTR to China, the most vocal of whom have been U.S. labor unions and human rights groups, said working-class Americans will ultimately pay the price of PNTR in lost manufacturing jobs. Furthermore, the critics said that China's human rights record is so appalling that the United States should not reward Beijing by supporting corrupt institutions.

Clare Haney is the San Francisco bureau chief for the IDG News Service, an InfoWorld affiliate. Margret Johnston, Washington correspondent for the IDG News Service, contributed to this article.

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