Tag Archives: China


Innovative Complacency or the Wisdom of the Deceived?

Screenshot 2016 08 26 05 09 48

Source: Avaya, THE PROMISE OF DIGITAL TRANSFORMATION (DX) IN ASIA PACIFIC’S LEADING INSTITUTIONS

This is where I see a real problem for developed Asia: a complacency and disinterest in the role of technology and innovation. Or is it the clarity of vision from too much innovation?

In a survey conducted by IDC on behalf of Avaya (no link available, you need to sign up to get a copy), key IT decision makers from developed Asian countries (leaving aside Australia for now) were much more likely to downplay the role of innovation in driving business. Singapore came lowest with 14% of respondents believing the statement “innovation is extremely important to drive business.” Compare that to around 40% in India, Thailand and the Philippines.

(Avaya, in case you’re wondering, “is a leading provider of solutions that enable customer and team engagement across multiple channels and devices for better customer experience, increased productivity and enhanced financial performance.” That could probably be simplified.)

In short (excluding Taiwan for which there is no World Bank data, and Australia, for now) the Asian economies with the highest GDP per capita — Singapore, Japan, Hong Kong – are those that value innovation the least. South Korea is only slightly behind there in terms of valuing innovation.

The same holds true when measured by Internet penetration: the more internet there is, the less valued is innovation.

Screenshot 2016 08 27 14 29 10

Source: Avaya survey (col 1), World Bank (cols 2-3)

At the other end, it’s also generally true. The lower the GDP, the more likely a country is to value innovation.

The sad truism is that once you reach a certain level of development — and you don’t experience serious recession or other economic upheaval — you tend to see innovation as an unwelcome disruption. In other words, you identify with the established industries, the established way of doing things, probably because that’s where you work and get your living from.

Looking at it the other way, the less developed a country is, the more people — and we’re talking ‘key IT decision makers’ here, not the rank and file folk — see innovation as a way of improving things.

Of course, there’s another possibility too: that those ‘key IT decision makers’ have seen innovation and they realise it isn’t as great as everyone makes it out to be. Indeed, I have some sympathy with that view. The more ‘disruptive’ a technology is, the more disruption it causes — meaning not just that big slow behemoths are put to the sword, but the people who work for them, the companies that supply to them, or make a little here and there in the supply chain.

A truly disruptive business/technology will not only chop off the head of an industry, it will cut off the entrails and lay to waste the body. That can be painful, and not necessarily good for consumers, or anyone standing in the way.

The other question raised in the survey was whether traditional traditional companies in the Asia Pacific would be able to take control against ‘Uber-like’ competitors. Nearly half said it was difficult to compete against such disruptors, and only 3% said they planned to be disruptors themselves. And while 43% felt they were on a par with their peers in terms of being able to fight back, only 6% felt they were “best in class”. Asian modesty, or a serious crisis of confidence?

Australia and China are worth a separate look here. Australia scored highest on the innovation/importance question, with more than 46% of respondents reckoning it was important. That’s good, but it’s probably part cultural. Why would you not at least pay lip service to the Innovation God?

And China skewed the other way. You would kind of expect China to be up there given what is going on in technology. But it’s low — 21/5% — less than South Korea, suggesting that either they were asking the wrong folk, or, maybe the disruption in China is already giving ‘key IT decision makers’ pause. China is by far the furthest down the track in terms of disruption in Asia, so maybe there is some truth in the alternative explanation of this (admittedly scant) data: As economies become more disrupted, so the key ‘IT decision makers’ in them become more pessimistic about how useful innovation is to the economy.

A Tale of Three Asias

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Source: GfK data

I’ve just been playing around with some smartphone data from GfK, which collects its data by point-of-sale (POS) tracking in 90+ markets and estimates values based on unsubsidized retail pricing — meaning I guess that these are not the prices that folk may be paying for their phones exactly, but ultimately. The chart above is me calculating the Average Selling Price by dividing unit sales with sales value.  

Raw conclusions: Emerging APAC — India, Indonesia, Cambodia, Philippines, Malaysia, Thailand and Vietnam — have the cheapest smartphones in the world, and they’re getting cheaper. Two years ago they were above $200, now they’re less than $160. 

Then there’s Developed Asia: Australia, Hong Kong, Japan, New Zealand, Singapore, South Korea and Taiwan. There smartphones are the most expensive in the world, by a yard or two. Although prices have fallen too, by 8%, in the two years, folk in this part of the world still pay $150 more for their smartphones.

And then there’s China. China started below the Middle East and Africa, Central/Eastern Europe and Latin American but ended it up above all three, with the ASP rising by 16%. Interestingly, the rise occured in one spurt (making me worry there’s a problem with the data, though this might be down to the launch of the iPhone 6 in China in the last quarter of 2014. ASPs there have held steady since.) 

Bottom line: Anyone selling phones in Asia — indeed, anything that involves mobile — needs to think in terms of at least three distinct markets, in terms of purchasing power, in terms of computing power, in terms of screen size and connectivity. 

BBC – Cybercrime: One of the Biggest Ever

My contribution to the BBC World Service – Business Daily, Cybercrime: One of the Biggest Ever

Transcript below. Original Reuters story here

If you think that all this cybersecurity stuff doesn’t concern you, you’re probably right. If you don’t have any dealings with government, don’t work for an organisation or company, and you never use the Internet. Or an ATM. Or go to the doctor. Or have health insurance. Or a pension.

You get the picture. These reports of so-called data breaches — essentially when some bad guy gets into a computer network and steals information — are becoming more commonplace. And that’s your data they’re stealing, and it will end up in the hands of people you try hard not to let into your house, your car, your bank account, your passport drawer, your office, your safe. They may be thieves, or spies, or activists, or a combination of all three.

And chances are you won’t ever know they were there. They hide well, they spend a long time rooting around. And then when they’ve got what they want, they’re gone. Not leaving a trace.

In fact, a lot of the time we only know they were there when we stumble upon them looking for something else. It’s as if you were looking for a mouse in the cellar and instead stumbled across a SWAT team in between riffling through your boxes, cooking dinner and watching TV on a sofa and flat screen they’d smuggled in when you were out.

Take for example, the case uncovered by researchers at a cybersecurity company called RSA. RSA was called in by a technology company in early 2014 to look at an unrelated security problem. The RSA guys quickly realized there was a much bigger one at hand: hackers were inside the company’s network. And had been, unnoticed, for six months.

Indeed, as the RSA team went through all the files and pieced together what had happened, they realised the attack went back even further.

For months the hackers — almost certainly from China — had probed the company’s defenses with software, until they found a small hole.

On July 10, 2013, they set up a fake user account at an engineering website. They loaded what is called malware — a virus, basically — to another a site. The trap was set. Now for the bait. Forty minutes later, the fake account sent emails to company employees, hoping to fool one into clicking on a link which in turn would download the malware and open the door.

Once an employee fell for the email, the hackers were in, and within hours were wandering the company’s network. For the next 50 days they mapped the network, sending their findings back to their paymasters. It would be they who would have the technical knowledge, not about hacking, but about what documents they wanted to steal.

Then in early September they returned, with specific targets. For weeks they mined the company’s computers, copying gigabytes of data. They were still at it when the RSA team discovered them nearly five months later.

Having pieced it all together, now the RSA team needed to kick the hackers out. But that would take two months, painstakingly retracing their movements, noting where they had been in the networks and what they had stolen. Then they locked all the doors at once.

Even then, the hackers were back within days, launching hundreds of assaults through backdoors, malware and webshells. They’re still at it, months later. They’re probably still at it somewhere near you too.

Hunt for Deep Panda intensifies in trenches of U.S.-China cyberwar | Reuters

My piece on what Deep Panda looks like in action: Hunt for Deep Panda intensifies in trenches of U.S.-China cyberwar | Reuters:

Security researchers have many names for the hacking group that is one of the suspects for the cyberattack on the U.S. government’s Office of Personnel Management: PinkPanther, KungFu Kittens, Group 72 and, most famously, Deep Panda. But to Jared Myers and colleagues at cybersecurity company RSA, it is called Shell Crew, and Myers’ team is one of the few who has watched it mid-assault — and eventually repulsed it.

Myers’ account of a months-long battle with the group illustrates the challenges governments and companies face in defending against hackers that researchers believe are linked to the Chinese government – a charge Beijing denies.

‘The Shell Crew is an extremely efficient and talented group,’ Myers said in an interview.Shell Crew, or Deep Panda, are one of several hacking groups that Western cybersecurity companies have accused of hacking into U.S. and other countries’ networks and stealing government, defense and industrial documents.The attack on the OPM computers, revealed this month, compromised the data of 4 million current and former federal employees, raising U.S. suspicions that Chinese hackers were building huge databases that could be used to recruit spies.

China has denied any connection with such attacks and little is known about the identities of those involved in them.  But cybersecurity experts are starting to learn more about their methods.

Researchers have connected the OPM breach to an earlier attack on U.S. healthcare insurer Anthem Inc (ANTM.N), which has been blamed on Deep Panda.

RSA’s Myers says his team has no evidence that Shell Crew were behind the OPM attack, but believes Shell Crew and Deep Panda are the same group.

And they are no newcomers to cyber-espionage.CrowdStrike, the cybersecurity company which gave Deep Panda its name due to its perceived Chinese links, traces its activities to 2011, when it launched attacks on defense, energy and chemical industries in the United States and Japan. But few have caught them in the act.

    SHELL CREW IN ACTION

In February 2014 a U.S. firm that designs and makes technology products called in RSA, a division of technology company EMC (EMC.N), to fix an unrelated problem. RSA realized there was a much bigger one at hand: hackers were inside the company’s network, stealing sensitive data. 

‘In fact,’ Myers recalls telling the company, ‘you have a problem right now.’Myers’ team could see hackers had been there for more than six months. But the attack went back further than that.

For months Shell Crew had probed the company’s defenses, using software code that makes use of known weaknesses in computer systems to try to unlock a door on its servers. Once Shell Crew found a way in, however, they moved quickly, aware this was the point when they were most likely to be spotted.        SPEARPHISHING

On July 10, 2013, they set up a fake user account at an engineering portal. A malware package was uploaded to a site, and then, 40 minutes later, the fake account sent emails to company employees, designed to fool one into clicking on a link which in turn would download the malware and open the door. 

‘It was very well timed, very well laid out,’ recalls Myers.

Once an employee fell for the email, the Shell Crew were in, and within hours were wandering the company’s network. Two days later the company, aware employees had fallen for the emails – known as spearphish – reset their passwords. But it was too late: the Shell Crew had already shipped in software to create backdoors and other ways in and out of the system. 

For the next 50 days the group moved freely, mapping the network and sending their findings back to base. This, Myers said, was because the hackers would be working in tandem with someone else, someone who knew what to steal.

‘They take out these huge lists of what is there and hand it over to another unit, someone who knows about this, what is important,’ he said. 

Then in early September 2013, they returned, with specific targets. For weeks they mined the company’s computers, copying gigabytes of data. They were still at it when the RSA team discovered them nearly five months later. 

Myers’ team painstakingly retraced Shell Crew’s movements, trying to catalogue where they had been in the networks and what they had stolen. They couldn’t move against them until they were sure they could kick them out for good. 

It took two months before they closed the door, locking the Shell Crew out.  But within days they were trying to get back in, launching hundreds of assaults through backdoors, malware and webshells.

Myers says they are still trying to gain access today, though all attempts have been unsuccessful.  

‘If they’re still trying to get back in, that lets you know you’re successful in keeping them out,’ he said.

(Additional reporting by Joseph Menn; Editing by Rachel Armstrong and Mark Bendeich)”

Chinese hackers target Southeast Asia, India, researchers say

Chinese hackers target Southeast Asia, India, researchers say | Reuters

My piece on FireEye’s report about hackers. Other reports have appeared since. 

Hackers, most likely from China, have been spying on governments and businesses in Southeast Asia and India uninterrupted for a decade, researchers at internet security company FireEye Inc said.

In a report released on Monday, FireEye said the cyber espionage operations dated back to at least 2005 and ‘focused on targets – government and commercial – who hold key political, economic and military information about the region.’

‘Such a sustained, planned development effort coupled with the (hacking) group’s regional targets and mission, lead us to believe that this activity is state-sponsored – most likely the Chinese government,’ the report’s authors said.

Bryce Boland, Chief Technology Officer for Asia Pacific at FireEye and co-author of the report, said the attack was still ongoing, noting that the servers the attackers used were still operational, and that FireEye continued to see attacks against its customers, who number among the targets.

Reuters couldn’t independently confirm any of the assertions made in the report.

China has always denied accusations that it uses the Internet to spy on governments, organizations and companies.

Asked about the FireEye report on Monday, foreign ministry spokesman Hong Lei said: ‘I want to stress that the Chinese government resolutely bans and cracks down on any hacking acts. This position is clear and consistent. Hacking attacks are a joint problem faced by the international community and need to be dealt with cooperatively rather than via mutual censure.’

The Cyberspace Administration of China, the Internet regulator, didn’t immediately respond to written requests for comment.

China has been accused before of targeting countries in South and Southeast Asia. In 2011, researchers from McAfee reported a campaign dubbed Shady Rat which attacked Asian governments and institutions, among other targets.

Efforts by the 10-member Association of Southeast Asian Nations (ASEAN) to build cyber defenses have been sporadic. While ASEAN has long acknowledged its importance, ‘very little has come of this discourse,’ said Miguel Gomez, a researcher at De La Salle University in the Philippines.

The problem is not new: Singapore has reported sophisticated cyber-espionage attacks on civil servants in several ministries dating back to 2004.

UNDETECTED

The campaign described by FireEye differs from other such operations mostly in its scale and longevity, Boland said.

He said the group appeared to include at least two software developers. The report did not offer other indications of the possible size of the group or where it’s based.

The group remained undetected for so long it was able to re-use methods and malware dating back to 2005, and developed its own system to manage and prioritize attacks, even organizing shifts to cope with the workload and different languages of its targets, Boland told Reuters.

The attackers focused not only on governments, but on ASEAN itself, as well as corporations and journalists interested in China. Other targets included Indian or Southeast Asian-based companies in sectors such as construction, energy, transport, telecommunications and aviation, FireEye says.

Mostly they sought to gain access by sending so-called phishing emails to targets purported to come from colleagues or trusted sources, and containing documents relevant to their interests.

Boland said it wasn’t possible to gauge the damage done as it had taken place over such a long period, but he said the impact could be ‘massive’. ‘Without being able to detect it, there’s no way these agencies can work out what the impacts are. They don’t know what has been stolen.’

Pornchai Rujiprapa, Minister of Information and Communication Technology for ASEAN member Thailand, said the government was proposing a new law to combat cyber attacks as existing legislation was outdated.

‘So far we haven’t found any attack so big it threatens national security, but we are concerned if there is any in the future. That’s why we need a new law to handle it,’ he told Reuters.

(Additional reporting by Ben Blanchard in BEIJING and Pracha Hariraksapitak in BANGKOK; Editing by Miyoung Kim and Ian Geoghegan)”

(Via.)

Outsider Ren pits Huawei against the world

A piece I wrote for Reuters with Lee Chyenyee: 

(Reuters) – In the 1990s, Huawei CEO Ren Zhengfei visited the United States several times, hoping to learn from its leaders of industry about how to turn his Chinese telecoms equipment maker into a global company. On one trip in 1992, in the days before China had credit cards, he paid all his bills with cash from a $30,000 stash in his briefcase.

Sixteen years later, Ren was listed among Forbes’ 400 richest Chinese and Huawei was one of the world’s largest telecoms gear vendors, but the United States still treated him as an outsider. He was keen to win customers like AT&T, Verizon and Sprint but had secured just $200 million of business in the U.S. in 2007 – in a $23 billion global market. Early that year, the United States effectively vetoed Huawei’s bid for U.S. networking equipment manufacturer 3Com on security grounds.

Outsider Ren pits Huawei against the world | Reuters

On the ropes, Apple’s China nemesis still dreams

Here’s a piece I wrote with Lee Chyen Yee about the man and company behind the iPad trademark battle in China.

(Reuters) – Yang Long-san, Apple’s nemesis in a battle over the iPad trademark in China, once strutted the expo halls with dreams of market dominance. His company, Proview, may now be in ruins and his most valuable asset a disputed trademark, but those dreams remain intact.
“My biggest wish is to resolve all these frustrating problems and put them behind me,” Yang said in a recent telephone interview. “If we can resolve all the problems we have now and I have a chance to make a comeback, I’d still want to overtake my old competitors.”
Much of that will depend on whether he wins a long-running dispute over ownership of the trademark in China – Apple’s second-biggest market by revenue. Although a recent decision by the Shanghai district court to reject Proview’s demands that Apple stop selling the iPad was a setback for Proview, the case is still to be heard in the higher court in the southern Chinese province of Guangdong Wednesday.
A decision against Apple there would set a precedent that would create an uphill battle in other cases in lower courts around China. Local media have said Proview is seeking up to 10 billion yuan ($1.6 billion) in compensation.
Proview’s fortunes may currently be the polar opposite of Apple – one has creditors at the door and the other is the world’s most valuable listed company – but both illustrate how the fickle world of technology can make or break a company.
Yang and Proview rode the first wave, when every home and office desk had to have a computer, and a screen. For Apple, the last decade has seen it ride the crest of a new wave where the computer moved from a commoditized, clunky desktop to a fashionable mobile consumer device.
Proview may now be a shadow of a company, trying to convert its last major asset into cash, but it was not always so. “They definitely existed,” says IDC analyst Rhoda Alexander, who covered them for a while. “They were a significant manufacturer and a major player.”

The full story can be found at reuters.com

Facebook’s daunting Asian challenge

Here’s a piece I pulled together with the help of Reuters reporters Andjarsari Paramaditha, Camilo Mejia and Estelle Griepink in JAKARTA, Harichandan Arakali in BANGALORE, Lee Chyen Yee in HONG KONG, Kazunori Takada in SHANGHAI and Harry Suhartono in SINGAPORE.

Facebook aims to connect all two billion Internet users. So far it has captured 845 million of them. Of the rest, nearly 60 percent live in Asia and hooking them is going to be a daunting challenge.

A block on access in China, court cases in India and rivalry from other services elsewhere in the region stand between Mark Zuckerberg’s Facebook and more than 700 million users.

"The size of our user base and our users’ level of engagement are critical to our success," Facebook said in its SEC filing for an initial public offering. Quoting industry data that there were two billion Internet users globally, it said: "We aim to connect all of them."

Growth is held back in the rest of the world, either because of limited Internet penetration, or because those who want a Facebook account already have one.

Full text here.

China’s Mystery Patterns

This has absolutely nothing to do with what I should be working on but this piece in Gizmodo caught my eye: a number of weird lines and structures in the middle of the Gobi Desert in China’s western reaches. Like this one:

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They don’t seem to make much sense, despite some quite ingeniuous explanations by some of the commenters.

I’ve put all the locations in one Google Map here. I don’t claim to have the answers but I’ve found some clues.

While it’s true that they seem to have some military connection, they are not close enough to Lop Nur to be part of the nuclear weapons testing that took place there.

A book by John Wilson Lewis and Litai Xue called China Builds the Bomb says that Dunhuang, the nearest town, became the temporary base for a PLA unit in 1958 assigned to find the country’s first nuclear test base. Although they quickly moved further west (settling for Lop Nur), the Soviet advisors had come up with a site some 140 km northwest of Dunhuang, relatively close to where all the weird patterns are.

Part of the explanation can be found on an Australian military buff’s website.  It doesn’t give sources, but describes the patterns which most resemble airfields to be mock airstrips along with concrete pads that serve as targets for missile testing (the piece was written in 2005.) This would seem to suggest that the other patterns are also targets, although they’re not mentioned in the piece.

资料图:在2006年珠海航展上亮相的国产月球车。.

Another clue is in this machine-translated piece about China’s lunar ambitions. It says that Chinese researchers are based about 200 km from Dunhuang where the country’s version of the Mars Rover is undergoing testing in conditions “closest to the moon.” It says they have  built a “a board room, five generators…and a huge indoor stadium.” I can’t see anything like that but given what is out there in that desert I wouldn’t be surprised to find several.

ASEAN Phishing Expeditions

Mila Parkour, the indefatigable phish researcher from DC, points to some recent spear-phishing attacks which to me help confirm that Southeast Asia, and ASEAN in particular, has become something of a focus for the chaps in China.

They also highlight just how vulnerable diplomats in the region are because of poor security.

One is a phish apparently coming from the Indonesian foreign ministry, in particular one Ardian Budhi Nugroho, whom the email correctly describes as from the Directorate of ASEAN Political Security Cooperation. The subject matter is topical and credible:

Dear Sirs/Mesdames,
Enclosed herewith letter from Director for ASEAN Political-Security Cooperation, informing the date of the next Direct Consultations between ASEAN and P5 Nuclear Weapon States, which will be held on 4 – 6 October 2011 in New York. A Tentative Programme of the Direct Consultations is also attached for your kind reference. Thank you for your attention and continued cooperation.

The only good thing about these phishes is that they reveal something of the attacker’s interests. These attacks are timed carefully a week or so ahead of key meetings–in this case a Oct 4-6 meeting in New York of ASEAN and P5 Nuclear Weapon states (one of those states, of course, is China). The email was sent on Sept 20.

The email address given, aseanindonesia@yahoo.com, doesn’t appear to be genuine, but it could easily be. Look, for example, at the email addresses listed here. More than half are either ISP or webmail addresses.

Diplomats need to get wise to these kinds of attacks by using their domain’s email addresses and being more sophisticated about their communications (not sending attachments, for one thing, and telling me they don’t.)

How does all this work? We don’t know who received this but it’ll probably be a list of diplomats attending the talks–not hard to find, as we can see from the above list. It only needs one member of each delegation to open the infected attachment for their whole delegation to be in danger of China–or whoever is behind this attack–to be able to monitor everything they do.