Baidu hacker lawsuit can proceed in US court

Baidu is the world's third largest Internet search engine

 A Picture shows the logo of Baidu on its headquarters in Beijing. A US judge ruled Thursday that Baidu has a "plausible" legal case against a domain registry firm that let hackers commandeer the Chinese Internet search giant's website.

 A US judge ruled Thursday that Baidu has a "plausible" legal case against a domain registry firm that let hackers commandeer the Chinese Internet search giant's website.

Chin backed two of seven claims Baidu made against in a suit filed in January.


In a partial victory for domain name company Register.com, US District Judge Denny Chin dismissed five of seven claims Baidu made against the firm, including breach of contract, complicity in trademark infringement and aiding trespass. He only backed two of Baidu's counts against Register.

"I hold that Baidu has alleged sufficient facts in its complaint to give rise to a plausible claim of gross negligence or recklessness," Chin said in his ruling.

"If these allegations are proven, then Register failed to follow its own security protocols and essentially handed over control of Baidu's account to an unauthorized intruder, who engaged in cyber vandalism."

Hackers launched a cyber-attack on Baidu on January 11 by gaining access to the search firm's account at Register, in a move the firm said cost it millions of dollars.

For about five hours, Baidu traffic was rerouted to a Web page showing an Iranian flag; a broken Star of David, and a written message stating "This site has been hacked by the Iranian Cyber Army."

Baidu is the world's third largest Internet search engine and is reported to control more than 70 percent of the Chinese-language market.

Hackers seized the Baidu account by duping a Register tech support worker into changing the email address that Baidu had on file at US-based Register, legal documents maintained.

The Register support worker asked the imposter for security verification information but didn't bother to check whether it was correct as required by Register policy, according to court paperwork.

The hacker later pretended to forget the Baidu account password and, because of the altered email address, was sent a link granting access and control.

"If Register had simply followed its own security protocols, the attack surely would have been averted and neither Register nor Baidu would have been victimized," Chin concluded.

Baidu and Register are due back in Chin's New York courtroom next month for a pre-trial hearing.

(c) 2010 AFP

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Ten Reasons Chinese Companies Fail In The U.S.

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A couple of years ago, I did a post on my blog listing my 10 reasons why Chinese companies were failing in the United States.

In response to that post, Nina Ying Sun at the Plastics News Blog did her own post entitled "Why Chinese Companies Fail the US Market," explaining, agreeing on and challenging the items on my list.

I then did a new post, entitled, "Why Chinese Companies Fail in the U.S., Part II," responding to Ms. Sun.  Someone just tweeted on this post and when I followed the link and read it again, I realized nothing has changed.

Chinese companies are still failing in the United States at what I see as an alarming rate--and the reasons I see for that have not changed a bit.


Here is my list, with Ms. Sun's comments and then my comments on Ms. Sun's comments:

1. Chinese companies focus on a Chinese consumer, not an American one.

Ms. Sun's comment: "Chinese companies would like to find out more about their target American consumers, but they mostly rely on personal-level approaches to collect business information, lacking a systematic and scientific market investigation conducted by professional Westerners that understand the market."

My comment: Very interesting and, I think, accurate observation. Chinese clients have driven me nuts by asking my views on things that I know nothing about, and then completely ignoring my advice when I try to hook them up with real experts. The following are typical conversations:

Chinese client: How much should we pay for that U.S. trademark?
Me: I have absolutely no idea. I just do not know such business well enough to be able to help you at all on this. But, we have worked with a company that does nothing but value IP and I would be happy to give you their name.
Chinese client: But what is your best estimate?
---

Chinese client: Should we start out selling our product just on the West Coast or should we start out nationally?

Me: Good question. Difficult question. It seems to me the answer to this will hinge greatly on the costs involved and on your ability to set up distribution networks. My firm does not handle questions like this (and even if we did, I do not think it would make sense for you to pay law firm rates for this information) but I would be happy to refer you to top notch business consultants who do.
Chinese client: Should we start out in Los Angeles, Chicago or New York?

2. Chinese companies fail to realize that one reputation-damaging mistake in the United States could doom them forever here.

Ms. Sun's comment: This one is dead-on. And how come they don't realize this common sense? Because they get by in China and assume it's the same in the States.

My comment. Exactly.

3. Chinese companies fail to realize it will take time for them to make an impact in the United States and they are unwilling to spend the time and money necessary to do so.

Ms. Sun's comment: Chinese people take such pride of the fact that industrialization, urbanization and modernization have happened in China in a much shorter period time than in the West that they believe, if you try hard enough, everything can be done fast and well. Why don't they invest enough money to lay the ground work for the new market? Well, they look at the exchange rate. The same exchange rate that makes the Chinese production cost in yuan seem so low magnifies the marketing cost in dollars in the States.

My comment: Okay. But see number two above. Haste oftentimes makes waste.

4. Chinese companies focus too much on the end result (making money), and by doing so, they sacrifice the professionalism that would allow them to achieve long- term success.
Ms. Sun's comment: The Chinese would ideally like long -term success. But the drastic social, economic and political upheavals and changes in the past century have paralyzed Chinese people's long-term thinking. Fill the pocket as full as possible before the next change hits, be it credit policy, industry standards or consumer interest.
My comment: Absolutely true. Why think long term if there may be no long term? This explains the reason for the problem, but it still needs to be resolved.



5. Chinese companies tell users what they want instead of listening to users.

Ms. Sun's comment: This obnoxious mentality is a hangover of the old Soviet-Union-style "planned economy" (1949-1978). That period of time featured insufficient supply of necessities and one-sided propaganda.

Although it's hard to question about China running a market, capitalistic economy today, the country skipped some vital steps in the development of the Western countries.

My comment: Same as for number four above.

6. Chinese companies focus too much on making money in the short term, rather than on building the quality necessary to sustain themselves in the long term.

Ms. Sun's comment: What pops up in my mind includes: vicious and endless price wars, a business environment that has deprived consumers their say, and lack of technology and craftsmanship.

My comment. I agree, but what pops into my mind is that companies must be broad-minded enough to recognize that what makes sense in one country may not make sense in another. Indeed, one might even say this of China's regions and there are certainly plenty of Chinese companies that have managed to succeed in China as a whole by localizing their product or their marketing by region.

7. Chinese companies fail to understand how beauty and design might distinguish their product from that of their competitors.

Ms. Sun's comment: Traditionally, domestic consumers simply can't afford beauty and design. Price is the only distinguishing point. Plus, the companies don't want to invest much on design, because it's bound to be copied by competitors right away, thanks to the absence of intellectual property protection in China.

My comment: All true, but see my answers to Number four and number seven above.

8. Chinese companies rely too much on phone calls and face-to-face meetings instead of e-mail.

Ms. Sun's Comment: This is probably part of the Asian culture, underscoring personal communication instead of machine-generated and less interactive e-mail. I don't think it's necessarily a disadvantage though. Japanese companies have done well in the U.S. market, despite their preference for in-person meetings and phone calls rather than e-mail.

My comment. When in Rome..... But, I agree this may not be a disadvantage, so long as the Chinese company has the time and the people for it.

9. Chinese companies fail to use "simple and elegant designs."

Ms. Sun's comment: Unfortunately, they are trapped in between complicated traditional styles and a blank page of modern Chinese inspiration. Again, they can't justify investment on design, because it will be copied by competitors overnight.

My comment: See my comment to number seven above.

10. Chinese companies fail to realize their need to hire MBAs and those with local knowledge.
Ms. Sun's Comment: Call them cheap or arrogant. They don't trust MBAs or Western veterans unless foreseeable return is guaranteed. They also want everything under their control, not threats and risk brought by language barrier and different business values.

My comment: I don't know what to call this but I know it is not wise.

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Wisdom compromised

The Sages: Warren Buffett, George Soros, Paul Volcker, and the Maelstrom of Markets.

Author: Charles R. Morris
Publisher: Public Affairs
Ah, if only we could capture the intellect of financial geniuses in a book.

Only then will we be able to finesse our craft of investing, boost our confidence, harness positive energy and make killings in the stampeding environment of stock markets.

Best yet, if the approaches of these geniuses are poles apart.

We can then garner the best of each and excel midway, making us fearless yet grounded by reality and logic.

With that need in mind, Charles R. Morris puts together in his new book three sages, distilling distinctive investment styles of the two, and reminiscing the essence of one fine public servant.

But does profiling the lives of sages offer useful lessons for all of us?

Not really, if the sages are Warren Buffett, George Soros and Paul Volcker.

Much less so if the profiles make up of a series of quick recounts and lack in-depth analysis of the financial wisdom of these successful individuals.

Furthermore, while the life of the enigmatic Buffett is never tiring to read, his investment philosophies are more comprehensibly documented in Alice Schroeder’s Snowball.

Soros, meanwhile, has authored a number of books in which he offers more detailed descriptions of his trading methods and strategies.

The most well-known one being Soros’ magnum opus, The Alchemy of Finance, from which Morris, too, has quoted.

Morris, in a ham-fisted attempt to document the extraordinary life and career of Soros in slightly over 50 pages, has made Soros seem less of a sage than he deservingly is.

Although Morris regards Soros as a keen global trend reader with “feline sensitivity to quivers of disharmony in the economic flux”, his account of Soros’ trading history in quick succession and brief summation makes Soros looks more like a barbaric trader short of conviction and confidence.

On a few occasions, Morris makes it seem like Soros’ success comes more from luck than flair.
“My father changes his position on the market because his back starts killing him. It has nothing to do with reason,” Robert Soros is quoted as saying about his father’s investing intuition.

Morris’ inclusion of Robert’s comment offers little humour but reinforces Soros’ veering conviction.
In addition, Morris’ narrative of economic scenarios prevailing at the time is too swift and brief, confusing reader sthe least but disabling them from doing their own analysis the most.

“Without great conviction, (Soros) expects credit contraction. The stock market and house markets are both weakening, banks are in serious trouble and currencies are pushing against their upper bounds. On the positive side, the budget deficit is falling along with interest rates, and banks are slowly improving their balance sheets. What to do?”

Anyone will get lost in this economic scenario. Yet there are more.
Indeed, Morris’ impatience with economic theories is most obvious in the chapter on Paul Volcker, the man whom Alan Greenspan succeeded as former chairman of Federal Reserve.

Hoping to cover Volcker’s two-decade long career as an expert in monetary policies, Morris sails through the various economic conditions from which Volcker honed his lore, but remains short on specific attributes that make Volcker a man of implacable integrity.

The reader lapses into a trance of economic frenzy, hearing not the voice of a great man calming wave after wave of financial disruption, but the sound of screeching financial jargons that deafens anyone unfamiliar with the interlocking world of US economy and politics.

But the book does shine with its more personal portrait of Warren Buffett.
Morris focuses less on the technicality of financial markets but more on the young and endearing Buffett, when he achieved his first billion and his journey to become the beacon of sound judgement in the world of investment.

At over 900 pages, Alice Schroeder’s Snowball seems to have covered nearly everything that people want to know about Buffett.

But Morris is sensible enough to know his disadvantage and smart enough to have included a summary of Buffett’s witty anecdotes on Wall Street’s follies.

On the issue of accounting misrepresentation, Buffett quips and compares it with Abraham Lincoln’s riddle: “How many legs does a dog have if you call his tail a leg? The answer: Four, because calling a tail a leg does not make it a leg.’”

His failure and inability to walk the reader through economic wilderness notwithstanding, Morris has done a fair job in drawing these biographical sketches.

But sages have feelings, too.
A deeper look into their inner worlds may be more rewarding than the brief recounts that Morris has provided.