Blackberry has no immediate plans to crack 'sensitive' China market

Blackberry Ltd Chief Executive John Chen sees Asia as key to reviving the loss-making smartphone maker's fortunes but expanding in the region's biggest market China, where security data concerns are rife, is currently not a priority.

Chen, who has been managing the company's turnaround for the past year, told Reuters that concerns over information security and the political backlash that security breaches could create dimmed the allure of the world's biggest smartphone market for Blackberry for the time being.

Instead, the company is keen on expanding in India and Southeast Asian countries like Indonesia, Malaysia and Singapore, Chen said in an interview in Beijing this week during his first visit as CEO to mainland China, where he attended the Asia Pacific Economic Cooperation forum.

"It takes too long to ramp up to a size that is even reasonable (in China)," said Chen.

"Even if I have that time and money I'll probably have better returns going into a different set of markets that we are already in, like India, South Asia, and Southeast Asia."

Questions about Blackberry's China strategy resurfaced last month after Chen told reporters that China was "too big a market to ignore" and that he was actively considering how to tackle a country in which Blackberry maintains a skeleton staff.

Blackberry shares have also fluctuated in recent weeks on rumours of a potential acquisition offer from Chinese hardware giant Lenovo Group Ltd.

Chen, a Hong Kong native who made his name turning around software firm Sybase during the 2000s, said he had met with Chinese government officials, investors and telecom carriers in Beijing. He also said he held informal meetings with executives from Lenovo and smartphone makers Xiaomi and HTC Corp.

Chen said Blackberry would be open to a partnership with an Asian counterpart that "has something serious to offer in business, not cash, because we have $3 billion in cash".

The most difficult question for Blackberry in China remains information security, which Chen has made the bedrock of Blackberry's brand.

He said any expansion into China would likely require an agreement with Chinese authorities over how Blackberry would respond to requests for user data, and Blackberry would have to provide a level of security that both Chinese and Western authorities were "comfortable" with.

"I don't want to get sucked into a geopolitical equation," he said.

In 2012, Blackberry reportedly allowed the Indian government to read some encrypted communications but not messages from its corporate customers. The Indian authorities had said that, after the 2008 militant attacks in Mumbai, they needed access to private messages for law enforcement purposes.

Chen said he understood the law enforcement argument, but did not want to jeopardize Blackberry's security reputation. He said he would not turn over information without a court order.

"There has got to be a compromise," he said.

At the same time, Chinese state-owned enterprises, which comprise a large proportion of the Chinese corporate market that Blackberry covets, may be sceptical about data security issues, he added.

These security concerns, however, will not stop Blackberry from exploring ways to enter "a great market", Chen said.

China may be "sometimes sensitive because of security" issues, he added. "But there are opportunities."

Blackberry Ltd Chief Executive John Chen sees Asia as key to reviving the loss-making smartphone maker's fortunes but expanding in the region's biggest market China, where security data concerns are rife, is currently not a priority.

Chen, who has been managing the company's turnaround for the past year, told Reuters that concerns over information security and the political backlash that security breaches could create dimmed the allure of the world's biggest smartphone market for Blackberry for the time being.

Instead, the company is keen on expanding in India and Southeast Asian countries like Indonesia, Malaysia and Singapore, Chen said in an interview in Beijing this week during his first visit as CEO to mainland China, where he attended the Asia Pacific Economic Cooperation forum.

Questions about Blackberry's China strategy resurfaced last month after Chen told reporters that China was "too big a market to ignore" and that he was actively considering how to tackle a country in which Blackberry maintains a skeleton staff.

Blackberry shares have also fluctuated in recent weeks on rumours of a potential acquisition offer from Chinese hardware giant Lenovo Group Ltd.

Chen, a Hong Kong native who made his name turning around software firm Sybase during the 2000s, said he had met with Chinese government officials, investors and telecom carriers in Beijing. He also said he held informal meetings with executives from Lenovo and smartphone makers Xiaomi and HTC Corp.

Chen said Blackberry would be open to a partnership with an Asian counterpart that "has something serious to offer in business, not cash, because we have $3 billion in cash".

The most difficult question for Blackberry in China remains information security, which Chen has made the bedrock of Blackberry's brand.

He said any expansion into China would likely require an agreement with Chinese authorities over how Blackberry would respond to requests for user data, and Blackberry would have to provide a level of security that both Chinese and Western authorities were "comfortable" with.

"I don't want to get sucked into a geopolitical equation," he said.

In 2012, Blackberry reportedly allowed the Indian government to read some encrypted communications but not messages from its corporate customers. The Indian authorities had said that, after the 2008 militant attacks in Mumbai, they needed access to private messages for law enforcement purposes.

Chen said he understood the law enforcement argument, but did not want to jeopardize Blackberry's security reputation. He said he would not turn over information without a court order.

These security concerns, however, will not stop Blackberry from exploring ways to enter "a great market", Chen said.

China may be "sometimes sensitive because of security" issues, he added. "But there are opportunities."