US tech, media giants weigh China challenge

By Kenneth Li

NEW YORK (Reuters) - U.S. technology and media companies are determined to tackle the challenges posed by China's vast but tightly controlled markets despite criticism by lawmakers in Washington, top executives said.

Frustration over regulatory quagmires, bureaucratic delays, and rampant piracy of intellectual property have not stopped companies from chasing a market that achieved near double-digit economic growth in 2005 with scant signs of losing steam.

But complying with Chinese laws, particularly ones that call on U.S. companies to censor politically charged material, has drawn the ire of U.S. lawmakers, some of whom aim to curb technology exports to authoritarian countries including China.

"China has a lot of growth (but it is) a little more difficult in terms of rule of law and regulation in the media sector, given the political aspects of media," Jeffrey Bewkes, chief executive of Time Warner Inc., told the Reuters Global Technology, Media and Telecoms Summit this week.

Last month, U.S. lawmakers blasted Google Inc., Yahoo Inc. and Microsoft Corp. for complying with China's policies on censorship.

"We operate in many countries, in many jurisdictions in the world," Yahoo co-founder David Filo told Reuters. "As part of that, for the sake of the employees working in those areas, we have to abide by the laws."

Yahoo has been accused of helping China's authorities identify two dissident writers who were both then jailed -- one for leaking state secrets and the other for subverting state power.

Yahoo's Internet interest in China includes a $1 billion investment last year to buy a 40 percent stake in Chinese e-commerce company Alibaba.com, which now runs Yahoo's China operations.

Filo said the core tenets of the Internet on which Yahoo was conceived -- spreading knowledge and fostering free expression -- would some day prevail even in restrictive regions. Persistence and its presence in these regions would pay off.

"You'll run into problems where governments don't share those values," said Filo, speaking generally about operating in foreign regions. "Long term, these values will win out."

Filo added, "We'd rather be there, than not."

STREET FIGHTER

U.S. lawmakers have also slammed Cisco Systems Inc., which makes the equipment that directs traffic on the Internet, for providing China with the tools to muzzle free speech.

"Cisco has never and will never work with a foreign government of any type for the purpose of restricting political speech," said Charles Giancarlo, Cisco chief development officer.

Giancarlo said Cisco's products lets companies block network attacks.  Continued...