From: William Knowles (wkC4I.ORG)
Date: Mon Apr 16 2001 - 04:32:59 CDT

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http://www.chinaonline.com/issues/econ_news/newsarchive/secure/2001/april/C01041352.asp

The following content is from the Economist Intelligence Unit,
a U.K.-based information provider.

(13 April 2001) Internet security poses a growing concern for
businesses in the West. A joint survey of corporations, government
agencies and organisations conducted by the San Francisco-based
Computer Security Institute and the Federal Bureau of Investigation in
the US last month found that 85% had experienced Internet security
break-ins over the previous year. Of these, 64% resulted in
significant financial losses. More than two-thirds of respondents said
their website, rather than their internal networks, was a frequent
point of attack.

Meanwhile, MessageLabs, a UK company that provides Internet security
services, has seen its anti-virus system go from catching one a day in
1999 to one every three minutes in 2000 and one every minute in 2001.
This February alone, the company dealt with almost 47,000 virus
incidents.

How about China? Domestic businesses and home Internet users got off
comparatively lightly with the LoveBug and Kournikova viruses that
paralysed Internet systems in Europe and the US, in part because local
companies do not rely heavily on e-mail for day-to-day business
communication. But this will change as computer ownership levels
overtake those of Japan as the highest in Asia, and Internet usage
soars both at home and in the office. The security risk to business
operations will increase as China's economy becomes more wired to the
international business community.

Threats will come not only from outside China. As in other countries,
it is China's younger generation that is attracted to computers and
the Internet. Many, keen to show off their skills, out of boredom or a
desire for fame and money, have the potential to become hackers. And
just as these young computer users are increasingly out of touch with
traditional China -- particularly the obsolete political jargon of the
ruling Communist Party -- so the government itself is struggling to
understand the earth-shaking implications of electronic communication
and the extreme damage it can inflict on business.

Public concerns over general Internet security levels are affecting e-
commerce, particularly in the area of online shopping. While a small
number of China's online shopping sites can take orders and accept
payment online, most consumers continue to rely on a cash-on-delivery
(COD) system to take delivery of their goods.

The enduring popularity of COD reflects the deep-seated lack of trust
in e-commerce security. According to a January 2001 survey by the
CNNIC, over 60% of Internet users felt that either Internet security
or the quality of their product could not be guaranteed when making
online purchases. Consumers are unwilling to hand over personal
financial information to companies about whom they know little or
nothing.

The government, ever keen to boost consumer spending, wants to provide
a legal framework to ensure the long-term success of e-commerce. The
passing of a new Internet security law by the National People's
Congress last month reflects the seriousness with which the
authorities are tackling concerns, including those about online
payments. The legislation follows the Draft Guidelines for China's
E-commerce Development, issued in April 2000. These provide a
framework to support commercial laws, intellectual property rights,
domain names, privacy and security.

Yet enforcement is all. And the central government can achieve little
without co-operation at the local level. Some provincial governments
have been proactive. Fujian's provincial government in south-eastern
China, for example, is conducting a crackdown on computer viruses this
month. The operation involves educating PC users about virus
prevention and control, and strictly enforcing anti-virus legislation
issued last year.

For China, more international business means more viruses, and more
viruses mean more international business. Symantec of the US, the
world's largest maker of computer-security products for consumers, has
been in Beijing since 1999. Symantec's priority was to adapt its
Norton software to the Chinese market; its most recent release was the
Norton AntiVirus 2001 software, which protects the user's computer
from hackers as well as viruses sent by e-mail or downloaded from the
Web.

The Internet security sector is attracting more players. As well as
international competition, at least eight local firms have published
their anti-virus software. Some foreign firms are opting to partner
with existing local operations. Softbank of Japan has entered a
four-way joint venture with Trend Micro, a Japanese Internet security
firm; ISS (Internet Security Solutions) of the US (www.iss.net); and
Internet Security One, a local company. IS-One (www.is-one.net), which
is currently investing in the biggest security-testing laboratory in
China, specialises in security assessment and intrusion detection
technology. Its clients include the largest Chinese financial
institutions, communications providers, ISPs and service providers, as
well as government agencies.

SOURCE: Business China

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