Rise in cybercrime in China offers business opportunity

By Li Qiaoyi Source:Global Times Published: 2017/4/18 19:58:40

Illustration: Luo Xuan/GT

Illustration: Luo Xuan/GT

With cross-border deals taking a growing share of China's thriving e-commerce sector, the risks from cyberattacks have also been on the rise. This calls for caution about the hidden danger of cross-border e-commerce, but it also means the Chinese market is now one of the most sought-after destinations for companies in the risk and identity space.

It's worth noting that there's still a long way to go before China's domestic authentication firms can rival their global counterparts, given that they still don't have the ability to deal with global identities.

The Asia-Pacific region is facing unprecedented threats in terms of complex cybercrime and fraud attacks. The number of daily attacks across the region saw a 40 percent increase year-on-year, according to the findings of a cybercrime report by digital identity firm ThreatMetrix released at the end of last year. Also, China was revealed as the most-attacked country in the region, with the findings showing that cross-border transactions are fueling the high attack rates.

One issue is the ever-increasing amount of sophisticated spear phishing attacks, in which fraudulent e-mails mimicking those from trusted sources are sent to people to get them to reveal information. Take my personal experience for example: I get spear phishing e-mails 20 times a day, saying things such as "your outlook account is going to expire within 24 hours, please log on and provide credentials to be able to validate." It's at the point where you don't know what to believe anymore and you're almost afraid to touch anything.

And it needs to be pointed out that it's not necessarily the case that the country's small businesses are the primary targets. Often big companies are attacked over and over again by organized crime. But at the same time, small enterprises sometimes have little knowledge about this and they just use simple firewalls to protect themselves. Clearly if they become a target, it's much easier to break them.

That said, digital IDs provide an answer or solution to the fact that in a mobile first, global first world traditional means of authentication can fail. However, considering that only a small portion of the Chinese population has an e-mail address, if an e-mail is sent to somebody for example, it's not exactly all that clear as to where they live. But for China, which is heading toward a consumption economy, it is increasingly a must to be able to authenticate online, because doing business, whether it's electronically or face-to-face, relies on trust. Unlike traditional means of authentication, which are essentially a patchwork quilt, online digital identities are capable of providing a trust border, if you will, around your behavior and credentials.

This means there are big opportunities in the Chinese marketplace for digital identity firms. China's technology firms have not yet created any global behemoths in the risk and identity sector, as it's highly expensive to create global identities, to put in place support offices, sales people, data centers and marketing staff, as well as all of the other things that you need to have to attract customers on a global basis. In this regard, indigenous Chinese offerings that on many occasions go for a lower price still pale in comparison to the more premium products and services from their global competitors. 

This could be similar to what's happened over time with regard to the Chinese government pushing indigenous operating systems and proprietary technologies that are not widely accepted and distributed outside China, such as the Chinese-built operating systems that compete with Android, Windows, or Apple's iOS. Are these Chinese operating systems going to be accepted in the US, or Western Europe? Probably not. To make China's homegrown standards truly appealing on a global basis and thus turn the country into an exporter not only of goods but also of compelling technologies in a digital world is still a distant objective. But it's a future direction that the Chinese economy should strongly consider.

The article was compiled by Global Times reporter Li Qiaoyi based on an exclusive interview with Reed Taussig, president and CEO of US-based digital identity authentication firm ThreatMetrix Inc, during the Digital Identity Summit APAC 2017 in Hong Kong earlier in April. bizopinion@globaltimes.com.cn

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