IDG CHIEF CLAIMS DEMANDS ON CHINA IMPERIL TECH SALES

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Patrick J. McGovern, chairman of the world's largest publisher of computer magazines, fears U.S. pressure on China over human rights issues could alter China's inclination to buy American technology. The controversy could affect prospects of U.S. computer companies, he said, not to mention the $10 million in annual profits his International Data Group expects from China.

IDG has been doing business in China since 1980, when it became the first U.S. company to set up a joint venture in China. Today, it has seven computer magazines, four high-tech trade shows, three market research offices, a book publishing company and a venture capital company in China.

"It's unfortunate that the State Department seems to be putting the economic interests of the United States secondary to other matters," Mr. McGovern told Advertising Age last week. "The U.S.-China trade relationship is probably the most important one for U.S. economic growth in the next 10 or 15 years. We think that by 2006 China will be the world's largest market for computers and communications-and our greatest export opportunity."

So far, Mr. McGovern said, IDG's interests haven't been affected by the controversy over China's human rights policies, but he's concerned enough to have written Congress and the U.S. Department of State to urge renewal of China's "most favored nation" status.

By June, President Clinton must certify that China has made progress on human rights or that benefit, which lowers duties on exports to the U.S., will expire. China has objected strenuously to that condition.

"It is taken as the height of arrogance and greatly resented as an interference with their ability to run their own affairs," Mr. McGovern said.

He thinks the economic stakes are high.

"The Chinese have a great respect for American technology," he said. "They really look to the U.S. as the most preferred technology source."

Singapore, Taiwan and South Korea achieved rapid economic growth while allowing little political dissent, he noted.

"Some say their economic growth came about because of the limited amount of criticism of their governments," Mr. McGovern said.

IDG's newest business in China-all but one of its operations are 50-50 joint ventures with Chinese partners-is a $50 million venture capital fund called Pacific Technology Venture-China. That $50 million investment represents projected IDG profits over the next five years, Mr. McGovern said. By investing the money in China, IDG postpones Chinese taxes on those profits and helps expand its information technology market.

"No society is perfect," Mr. McGovern said, "but the right things [moving to a market economy and privatization] are happening there. The political direction is the same in terms of greater economic empowerment with healthcare, education, a middle class. China is heading for a destination that's going to be a democratically functioning society."

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