Yahoo buys Chinese startup Ztelic to boost R&D

Yahoo has made yet another acquisition, this time picking up Beijing-based data analysis startup Ztelic to boost its research and development efforts in China.

The deal, announced Thursday, is Yahoo's second acquisition in two days and its 19th since former Google executive Marissa Mayer was made CEO of Yahoo a year ago this week.

Ztelic developed a software product for analyzing and monitoring activity on social networks. Yahoo said it bought the company for the engineering talent, which has been the motivation for a few of its recent buys.
"As part of our investment in our R&D efforts, we're bringing on a talented team of eight developers and engineers from Ztelic," Yahoo said in a statement via email.

Ztelic was founded by Hao Zheng, who formerly was chief architect at Yahoo's R&D labs in China and who also worked at one time for games developer Zynga in Asia, according to his LinkedIn profile.

He's now returning to Yahoo, where he'll play a "critical leadership role" at its R&D center in Beijing, Yahoo said. Terms of the acquisition weren't disclosed.

It's been a busy week for Yahoo. On Monday it reported its quarterly earnings, which showed a jump in profit but declining revenue. Two days later, it said it had bought Admovate, which makes technology to improve ad targeting on smartphones.

Chinese hackers hurt business, Congressional committee told

As senior officials from China and the United States wrap up a series of talks in Washington about an array of economic issues, across town members of Congress probed the extent of Chinese efforts to steal intellectual property from tech companies and other U.S. businesses.

"From defense contractors to manufacturing, no American company has been immune from the scourge of Chinese intellectual property theft," says Rep. Tim Murphy (R-Pennsylvania), the chairman of the House Energy and Commerce Committee's oversight subcommittee.

Among the witnesses on hand was Slade Gorton, a former senator from Washington who serves on the Commission on the Theft of American Intellectual Property, a group that has been studying the economic impact of the problem, with a particular focus on China.

Gorton cited the commission's estimate that cyber espionage and other forms of IP theft from foreign countries account for annual losses of $300 billion for U.S. companies. The group attributes between 50 percent and 80 percent of those losses to China.

The commission produced a series of short-, medium- and long-term solutions, ranging from the restructuring of U.S. government authorities that deal with intellectual property to encouraging reforms within China to strengthen laws against IP theft and their enforcement. That multifaceted approach comes from a recognition that the war against hackers will not be won simply by playing defense.

"It is clear that we need better defensive measures to deal with cyber theft and other forms of intellectual property theft, but I am convinced that that will never solve the problem on its own," Gorton says.

Last week's hearing comes amid ongoing, if halting, efforts in Congress to craft legislation to shore up the nation's defenses against cyber attacks, a policy debate that has focused on the appropriate mechanisms for businesses and government authorities to share information about threats and the extent to which the federal government should be involved in regulating the cybersecurity operations of the private sector.

"We cannot take these problems lightly," says Rep. Jan Schakowsky (D-Illinois). "They cost our economy billions of dollars and place our national security at risk, and as the number of Internet-connected devices and the use of cloud computing increases the number of entry points for malicious actors to exploit will also rise. With more information and more sensitive information now stored on the Web we must sharpen our focus on cybersecurity."

Issues of cybersecurity were expected to arise at this week's U.S.-China trade talks, though the matter is complicated by the string of revelations about U.S. surveillance programs by former government contractor Edward Snowden. Descriptions of the sweeping data collection involved in the National Security Agency's PRISM program could reinforce the contention of Chinese officials that they have been on the receiving end of cyber intrusions.

Witnesses at the recent hearing contended that the Chinese perspective often does not draw a distinction between the espionage that countries—even allies—routinely conduct on one another and hacking into businesses to steal trade secrets.

James Lewis, a senior fellow at the Center for Strategic and International Studies, where he directs the Technology and Public Policy Program, recalled a meeting with Chinese officials when a senior colonel in the People's Liberation Army told him: "'Look, in the U.S. military espionage is heroic, and economic espionage is a crime, but in China the line is not so clear.' So one of the things we can do is make the line a little clearer to them."

Much of the problem can be traced to a weak legal structure in China, Russia, and other countries that are identified with intellectual property theft, Lewis explains.

"They have no tradition of protecting intellectual property," he says. "One of the differences between the U.S. and countries like China and Russia is that we have laws and we enforce them. They either don't have laws and they certainly don't enforce them."

Apart from the legal factors, Lewis' diagnosis of China's stance on intellectual property notes a fear among party leaders that rapid economic growth is crucial to their ability to hold onto power, and the concern that businesses in the state-controlled economy are unable to innovate to achieve that growth.

Lewis says that the defenses of U.S. companies vary widely by sector—he gives high marks to the banking industry while he says many utilities are soft targets—but sums up the security posture of the private sector as "feeble," and has advocated for strong legislation to prod businesses to "harden their networks."

Study: British TV Dramas Gaining Traction Among Chinese Elite

China’s fiercely competitive streaming video sector has seen audience growth for an emerging content category that is attracting its most sophisticated local viewers: British TV dramas.

A new study from Beijing-based entertainment research firm Entgroup has revealed that China’s urban wealthy and well-educated are increasingly buzzing about Britain's lushly produced TV fare, including shows like Downton Abbey and Sherlock.

Comparing rates of discussion on Chinese social media sites, Entgroup found that British dramas now account for 9 percent of all mentions of foreign television programming, whereas just a few years ago such shows were essentially unknown in the country. Korean TV, by comparison, commands 28 percent of all social media discussion of international TV.

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But when Entgroup examined social media sites that draw an exclusive white collar and college educated userbase, discussion of British shows hit 13 percent, and Korean drama fell to just one percent.

The trend mirrors what Chinese television critics have taken to calling the “disdain chain,” in which British TV fans look down on fans of U.S. shows, American TV aficionados snub Korean soap fans, who themselves turn their noses up on people who simply like local Chinese TV.

“Though British drama viewers are a minority, they are high-end and very loyal,” said Jean Shao, spokeswoman of leading streaming video site Youku Tudou, told the Wall Street Journal. ”This is what the advertisers fancy.”

STORY: Chinese Online Video Giant Youku Tudou Acquires 33 U.S. TV Series

Chinese video sites are tailoring their offerings to meet the demands of this rarified slice of the viewership -- and the luxury advertisers they attract. Sohu.com Inc. launched the first dedicated British drama channel in China last year, the Journal noted in its report. And Youku Tudou debuted a British TV feed in April, followed by Tencent Holdings in June.

The U.K.’s premiere TV producers, such as BBC Worldwide and Fremantle Media, are finding their content much in-demand, as China video sites vye for exclusive rights. According to the Journal, Tencent has the exclusive rights to 13 British shows with a total of 500 episodes, while Youku Tudou Inc is licensed to stream 32 shows, with 200 episodes.

“The storylines in British dramas are more complete and British actors are A-listers in terms of acting skill,” said Zhu Xiangyang, chief content officer of Youku Tudou. “The high quality of British dramas is what demanding audiences look for.”

Caroline Torrance, director, scripted at BBC Worldwide said: “Our drama has always done very well in China and continues to do so. Viewers seem to really gravitate towards the rich story-telling and high production values of our series. Sherlock has been a hit there as it has worldwide, and Mad Dogs and Parade’s End are other dramas that have sold there recently."

Added Torrance: "With high-end titles, such as Top of the Lake, Orphan Black and A Young Doctor’s Notebook coming through our slate, I would expect we will continue to see success with our programs in this market."

U.S. says Chinese wind turbine firm stole trade secrets

A wind farm operating in China.

The Chinese company -- Sinovel -- is one of the country's largest producers of wind turbines. It is accused of encouraging an employee of U.S.-based AMSC (AMSC) to steal copyrighted source code from a computer in Wisconsin for use in its turbines.

Sinovel then used the technology in four turbines that were sold to customers in Massachusetts and installed not far from AMSC's headquarters.

"The fact that Sinovel has exported stolen American intellectual property from China back into the United States -- less than 40 miles from our global headquarters -- shows not only a blatant disrespect for intellectual property but a disregard for international trade law," AMSC CEO Daniel McGahn said in a statement.

Sinovel did not immediately respond to requests for comment.

PM3000, the software in question, helps regulate the flow of electricity from turbines to electrical grids. The theft resulted in a loss of $800 million for AMSC, according to the indictment handed up by a federal grand jury in Wisconsin.

Some 500 AMSC employees have lost their jobs following Sinovel's "egregious and unlawful behavior," McGahn said.

Related: EU-China trade spat widens

"The allegations in this indictment describe a well-planned attack on an American business by international defendants -- nothing short of attempted corporate homicide," U.S. Attorney John Vaudreuil said in a statement.

A conviction could carry penalties approaching $5 billion for Sinovel, as well as lengthy prison sentences for the accused individuals.

The U.S. has recently adopted a new strategy for combating what officials see as a persistent threat to the American military and economy: It has started naming China -- and its armed forces -- as the source of actions that pilfer military, trade and industry secrets.

The change in tactics follows years of virtual silence from American officials on the issue. The government's claims have been bolstered by a growing number of security firms and companies who say they have fallen victim to intellectual property theft attacks emanating from China.

President Obama raised the issue earlier this month during a summit with Chinese President Xi Jinping, but the meeting did not produce a publicly-announced breakthrough.

"It's quite obvious now that the Chinese senior leadership understand clearly the importance of this issue to the United States," White House National Security Adviser Tom Donilon said after the summit.

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Japan's Sharp to tie with Chinese firm, build LCD panel factory

Japan's Sharp said Thursday it will team with a large Chinese manufacturer to build a factory in Nanjing and mass-produce LCD screens for TVs, computers and tablets.

 

Sharp said it will form a joint venture with China Electronics Corp. (CEC) to manage the project, and aims to begin production in June 2015. The plant will eventually handle 60,000 LCD panels per month, each measuring 2.2 x 2.5 meters, which can then be divided into smaller sizes for consumer products.

 

Although Sharp is struggling with massive losses and going through a major restructuring to rebuild its finances, the company is still one of the largest LCD display makers in the world and possesses cutting-edge technology. Japan's Nikkei newspaper reported that as part of the deal, Sharp will transfer its technology for producing IGZO (Indium Gallium Zinc Oxide) screens to the venture and will receive payment in the "tens of billions of yen" in return, part of which it will use to fund the new investment.

 

IGZO allows for higher resolutions and lower power drain than traditional LCD screens, and devices that use the technology are beginning to appear on the market. Sharp has launched smartphones and tablets with IGZO screens, and Samsung Electronics, Asustek Computer and Fujitsu are all releasing laptops that use the technology.

 

Rumors have long circulated that Samsung and Apple are looking to build smartphones using IGZO screens. A second factory that can produce the technology would help allay fears of being dependent on a single supplier.

 

The new venture will be called Nanjing CEC-Panda LCD Technology and will be funded by a 17.5 billion yuan (US$2.8 billion) investment, 92 percent from CEC Group and 8 percent from Sharp. It will be officially established in March of next year.

 

Sharp said the Chinese plant will allow production at lower costs than its current factories, and it will retain the right to buy the panels produced at the new facility.

 

Sharp has been aggressively pursuing deals with foreign partners to shore up its finances as it looks to recover from deep losses. Since last year it has signed deals with Samsung, Foxconn and Qualcomm for joint production and research.

 

As a result of a deal announced in August 2009, Sharp and CEC already operate a Chinese joint venture producing smaller LCD panels, to which Sharp transferred some of its older technology. They said at the time they would negotiate a deal to build larger panels in the future.

 

Sharp booked a ¥545 billion loss last fiscal year but forecasts it can rebound to a ¥5 billion profit during the current period. It said Thursday that the finances of the new deal are already factored into its current forecast.

 

Follow me on Twitter @sajilpl

Japan's Sharp to tie with Chinese firm, build LCD panel factory

Japan’s Sharp said Thursday it will team with a large Chinese manufacturer to build a factory in Nanjing and mass-produce LCD screens for TVs, computers and tablets.

Sharp said it will form a joint venture with China Electronics Corp. (CEC) to manage the project, and aims to begin production in June 2015. The plant will eventually handle 60,000 LCD panels per month, each measuring 2.2 x 2.5 meters, which can then be divided into smaller sizes for consumer products.

Although Sharp is struggling with massive losses and going through a major restructuring to rebuild its finances, the company is still one of the largest LCD display makers in the world and possesses cutting-edge technology. Japan’s Nikkei newspaper reported that as part of the deal, Sharp will transfer its technology for producing IGZO (Indium Gallium Zinc Oxide) screens to the venture and will receive payment in the “tens of billions of yen” in return, part of which it will use to fund the new investment.

IGZO allows for higher resolutions and lower power drain than traditional LCD screens, and devices that use the technology are beginning to appear on the market. Sharp has launched smartphones and tablets with IGZO screens, and Samsung Electronics, Asustek Computer and Fujitsu are all releasing laptops that use the technology.

Rumors have long circulated that Samsung and Apple are looking to build smartphones using IGZO screens. A second factory that can produce the technology would help allay fears of being dependent on a single supplier.

The new venture will be called Nanjing CEC-Panda LCD Technology and will be funded by a 17.5 billion yuan ($2.8 billion) investment, 92 percent from CEC Group and 8 percent from Sharp. It will be officially established in March of next year.

Sharp said the Chinese plant will allow production at lower costs than its current factories, and it will retain the right to buy the panels produced at the new facility.

Sharp has been aggressively pursuing deals with foreign partners to shore up its finances as it looks to recover from deep losses. Since last year it has signed deals with Samsung, Foxconn and Qualcomm for joint production and research.

As a result of a deal announced in August 2009, Sharp and CEC already operate a Chinese joint venture producing smaller LCD panels, to which Sharp transferred some of its older technology. They said at the time they would negotiate a deal to build larger panels in the future.

Sharp booked a ¥545 billion loss last fiscal year but forecasts it can rebound to a ¥5 billion profit during the current period. It said Thursday that the finances of the new deal are already factored into its current forecast.

Follow me on Twitter @sajilpl

Chinese Coming-of-Age Drama ‘Tiny Times’ Eyeing Huge Local Debut

HONG KONG – Never mind its seemingly self-belittling title: Chinese coming-of-age drama Tiny Times is poised to become one of the biggest hits in the country this year, and its makers are going to extremes to make sure it opens with a bang. More than 600 simultaneously-held sneak previews will take place in China on Wednesday at 8pm local time in more than 60 cities across the country, before the film opens officially on Thursday. It’s slated to take up more than 40 percent of the total screenings in the country on its opening day – quite a feat in itself, given the presence of the recently-released Man of Steel and the Jet Li-starring Badges of Fury.

“For people in their 30s and 40s, it doesn’t really matter whether you get to see a film before everybody else -- they are usually more rational in how they spend their money,” said Guo Jingming, who has adapted his own novel from 2008 -- also titled Tiny Times -- for his directorial debut. “But young people are more impulsive -- they really, really need to see the film the moment it’s available. That’s why we are putting on these 600 shows.”

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Speaking to The Hollywood Reporter in his Shanghai office, Guo said he is confident the shows will sell out. His self-assurance stems from the frantic support shown by his fanbase: more than a decade after his career as a writer took off, he counts 19.7 million followers on Weibo, the Chinese equivalent of Twitter, and all three volumes of his Tiny Times novels -- which revolve around four young university graduates’ rites of passage as they navigate lives as adults -- have been best-sellers in the country.

The world premiere of the film itself at the Shanghai International Film Festival last week was packed to the rafters with his adoring fans whom, as Guo himself said, were mostly young women in their late teens.

Zhang Zhao, CEO of the film’s distributors Le Vision Pictures, told THR the day after the screening that “too many fans were coming to the show from so many different cities. “We tried to keep the number down, but we couldn’t – it’s crazy,” he added, beaming.

Guo said Tiny Times allows his viewers to dream about the future. “For example, look at Lin Shao,” he said, referring to the film’s protagonist played by A-lister Mini Yang Mi. “She began the story as an ordinary university student, and then she had to face all these things like job interviews and then intimidating bosses in the workplace. But she manages to pull through and her life gets better and better -- she’s got a great career, great friends and a handsome boyfriend. This is every girl’s dream life.”

Q&A: Chinese Star Vicki Zhao: ‘What We Need Is a Humanist Perspective’

And it’s a fantasy befitting a country careening in its turbo-charged way towards commodity-driven capitalism too. Boasting the production design of Huang Wei -- a former creative director of the Chinese edition of Vogue -- Tiny Times maintains a glitzy sheen which wouldn’t look out of place in any of China’s burgeoning array of lifestyle magazines. The fact that it’s set in a skyscraper-littered, mall-laden Shanghai adds to the allure of the whole enterprise -- especially for most of Guo’s readers, spread across the provincial cities of the vast country.

“I’ve always lived in Shanghai and I know this city well – and I’ve seen how it has developed and changed,” Guo said. “When people talked about Shanghai in the past, they would think of [novelist] Eileen Chang’s description of a city of the Bund and the international concessions before the war; later it would be Wang Anyi’s take of life in small halls in back alleys. What I want to deliver is an image of Shanghai here and now -- a modern city at the top of the world. I want to chronicle the city as it is now -- I want people to remember Shanghai as it is now.”

Guo said he’s very aware of how his emphasis in the individualistic pursuits for gratification casts the film apart from the nostalgia-tinged dramas from directors from previous generations. Tiny Times sells imaginings of lives yet to be lived.

“We are very different from people born in the 1960s or 70s -- they were people who dressed the same and ate the same food in the same cafeteria, living the same kind of life,” he said. “But for people born in the 1980s, or even more so for those from the 1990s, it’s about trying to be different from everybody else. Whereas doing that in the past would see you branded as an anomaly, these days it’s all about looking after myself -- saying, 'I want to enjoy life the way I like it.'”

STORY: China Box Office: 'Man of Steel' Flies High With $25.8 Million Weekend Haul

While Peter Chan’s American Dreams in China (about the lives of three cram school teachers in the 1980s and 90s) and Vicki Zhao’s So Young (a semi-autobiographical tale about university life in the 1990s) mined the nostalgia of Chinese viewers in their 30s and 40s to maximum box-office effect -- the two films grossed $87 million (535 million yuan) and $117 million (719.5 million yuan) respectively -- Tiny Times may well top them both, largely thanks to the demographical changes among Chinese cinema-goers today.

According to the latest statistics from the China Film Distribution and Exhibition Association, the average age of a moviegoer in the country has dropped from 25.7 in 2009 to 21.2 in 2012. While more mature viewers have now elected to stream movies on mobile or home platforms, a trip to the cinema has remained a bonding ritual for students -- and it’s hardly a surprise that they tend to prefer films drenched in optimism and bling.

Having presided over a few successful marketing campaigns during his two-year tenure at Le Vision Pictures -- including that of The Expendables 2, released in the same week as The Dark Knight Rises and The Amazing Spider-Man last September -- Zhang Zhao has been pragmatic in his approach to Tiny Times. “We’re not marketing a film -- we’re shaping the market,” he said, referring to the brutally precise campaigns deployed to zero in on the film’s young clientele.

Zhang said most of the film’s marketing activities are online, and that his team “didn’t put up one single advertising billboard” across the country. Knowing their fanbase is mostly high school students, the company put most of their effort into pushing the film through threads in China’s burgeoning social media networks, which count about 94 million students among their users, according to a report about new media released by the Chinese Academy of Social Science on Tuesday.

Not that Guo and his stars have eschewed all fo the traditional ways of movie promotion, however. The director has been traveling across the country with his cast -- which, apart from the more well-known Yang, also include Taiwanese stars Ko Chen-tung (You Are the Apple of My Eye) and Amber Guo (Au Revoir Taipei) -- and their presence at the Shanghai festival last week was the pinnacle of their tour, with the director’s pedigree boosted at industry panels at the film market, and the stars getting loads of exposure at the opening and closing ceremonies of premier Chinese festival.

For his part, Guo Jingming said he had turned down the offer of adapting the film in 2010 when China Film Group bought the adaptation rights to his novel. “I didn’t feel I was ready then -- and also the Chinese film market wasn't as vibrant then as it is now. Today the environment is good and allows for the presence of new directors,” he said, referring to how first-timers like Zhao and Xu Zheng (Lost in Thailand) have flourished with their debuts.

The success of homegrown dramas also signals how Chinese audiences have reconsidered what they want in their cinemas, Guo added. “They are not just looking for effects-driven, epic-looking Hollywood blockbusters or simple romantic comedies,” he said.

“We need to find something new so that we can get them excited – and what’s been lacking are stories addressing how particular generations of people became who they are. So you have to have stories which can resonate with them, something they can call their own.”

With a sequel planned for release in December and two volumes of his Tiny Times novels yet to be adapted, Guo would certainly hope for an unyielding explosion of the obsession.

 

Chinese malware attack affected dozens of South Korean organizations, researchers say

A recent targeted attack that used Chinese malware compromised over 1,000 computers belonging to dozens of South Korea organizations, according to researchers from Israeli security firm Seculert.

The main malware tool used in the attack is called PinkStats and has been used by several Chinese-language groups to target different organizations and nation states from around the world during the past four years, the Seculert researchers said Tuesday in a blog post.

PinkStats is designed to download and install additional malicious components after it infects a computer and then report successful installations to its command and control server.

In the South Korean attacks, the malware installed a common Chinese attack tool called "zxarps" that acts as a worm on the local network, the Seculert researchers said.

The "zxarps" tool uses a technique called ARP poisoning to intercept Web sessions from other computers on the network and inject a malicious ActiveX component into them. If executed, the ActiveX control installs the PinkStats malware.

The malicious component was signed with a valid digital certificate issued by certificate authority Thawte to what is likely a fake company with a South Korean name, the researchers said.

A second component installed by PinkStats is a malware tool used to launch DDoS (distributed denial-of-service) attacks. The component masquerades as software developed by South Korean antivirus vendor AhnLab.

The attackers don't seem to have sent any specific instructions to the DDoS malware yet, the Seculert researchers said. However, it is reasonable to assume that this could change at any time, they said.

Data obtained by Seculert researchers from a PinkStats administration panel suggests that over 1,000 computers in South Korea were infected in the recent attack. Many of those machines belong to universities and other educational institutions.

Earlier this year, attackers used malware to cripple the computer networks of several South Korean banks and TV broadcasters. While many in South Korea blamed North Korean hackers for the attack, some security researchers said the malware's code is distinctly Chinese.

Even though there has been speculation that Chinese-speaking hackers have attacked South Korean organizations before, PinkStats seems to be the first proof of such an attack, the Seculert researchers said.