In the news: Internet companies require security offices, Chinese textile makers move to US and anti-graft campaign uncovers Rmb38.7 billion

China to set up security offices inside internet companies

“Network security offices” staffed by police will be set up inside major website and internet companies, a move to strengthen the government's grip on the world's largest population of web users. The Ministry of Public Security will post police officers at “critical” internet companies to boost defence against cyberattacks and fight online criminal activity in order to safeguard users' information. No specific names were given, though China's largest internet companies include Alibaba, Tencent and Baidu. This comes on the back of the Cybersecurity Law draft issued in July, which allows the government to cut network access (including internet and telecom) and forces “critical” information infrastructure operators to undergo data security assessments. But how technically competent will the police at these in-house security offices be? Will they be IT experts? How much access will they have to the company's data? At any rate, what will really cause a stir is whether this rule will apply to foreign internet companies as well. They won't be too happy if it does.

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Chinese textile manufacturers move into southern US

As textile production in China becomes increasingly unprofitable as a result of rising wages, bills and logistical costs, more and more manufacturers have been moving offshore. Many companies have found cheap and abundant land and energy, eager workers and heavily subsidised cotton even in the US. American politicians have raced to provide Chinese textile-maker Keer Group with grants and tax breaks to bring back manufacturing jobs. At least 20 Chinese manufacturers have set up in South and North Carolina. While these textile companies are losing money in China, it's a different story in the US, where natural gas prices are lower, cotton is cheaper and local tax breaks and subsidies offer nice incentives (Keer got about US$20 million). Yarn production costs in China are now estimated to be 30% higher than in the US. Another advantage in the US is less worker unionisation, although cultural differences mean the Chinese companies need to get used to the slightly lower efficiency and “the American way of working,” according to a textile plant worker.

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Anti-graft campaign uncovers Rmb38bn in fines and ill gains

China's anti-corruption authorities have returned Rmb38.7 billion (US$6.2 billion) in confiscated bribes (cash, land and gifts) and fines for unpaid taxes and sales of underpriced state assets since President Xi Jinping launched his anti-graft campaign in late 2012. The Central Commission for Discipline Inspection (CCDI), China's top anti-corruption body, didn't specify which government entity received them, causing some to raise questions about the handling of seized assets as they operate outside of the law. Just under half, Rmb18.6 billion, has been handled by the formal legal system, while the remaining Rmb20.1 billion had been returned to state coffers. The CCDI works closely with the State-owned Assets Supervision and Administration Commission, which oversees the largest 117 SOEs. The SOE privatisation reform is increasing transparency and more SOEs are implementing strict internal compliance controls of international standard. But private-owned companies need to be extra careful too - enforcement against corporates has been just as fierce. The pharma, medical device and chemicals industries in particular need to watch out.

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