China Urges Adoption of Computer Safety Technology

China suggested companies and government agencies do more to prevent computer hacking and the spread of software viruses as increased use of digital technology heightens data safety risks.

Safeguards on information networks are “not strong” and the increasing use of mobile telecommunications poses “a severe challenge” to information security, the State Council said in a recommendation published on the central government’s website today. Industries including energy, transport and finance need to adopt technology to guard against computer viruses and hacking, the council, which represents government ministries, it said.

China, with more Internet users than the combined populations of the U.S. and Japan, is promoting information safety as it encourages more consumers to shop online and expands telecommunication networks to cover remote villages. The drive for enhanced computer safety technology will benefit anti- virus software providers including Kingsoft Corp. (3888), said OSK Securities analyst Billy Leung.

“Government agencies will be increasing their spending on software,” said Leung, who rates Kingsoft buy.

Companies including Qihoo 360 Technology Co. (QIHU), the biggest Chinese provider of computer safety software for consumers, and Beijing Teamsun Technology Co. (600410), a supplier of computer systems to governments, may also gain sales, Leung said.

E-Commerce Transactions

Kingsoft shares rose 0.6 percent to HK$3.19 at the close in Hong Kong trading today. Teamsun gained 1.2 percent to 7.39 yuan in Shanghai. Qihoo fell 4.1 percent to $15.75 in New York trading yesterday.

China aims to increase e-commerce transactions to more than 18 trillion yuan ($2.8 trillion) by 2015, the State Council said. Online commerce should account for more than 9 percent of overall retail sales, said the council, a panel comprising officials of key state ministries.

Alibaba Group Holding Ltd.’s Tmall site accounted for 37 percent of China’s business-to-consumer online commerce market in the first quarter, according to research company Analysys International. It leads second-placed 360buy Jingdong Mall, which has a 17 percent market share, according to Analysys.

To contact the reporter on this story: Mark Lee in Hong Kong at wlee37@bloomberg.net

To contact the editor responsible for this story: Anand Krishnamoorthy at anandk@bloomberg.net

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