IT vendors in search of new business code

Lenovo's $2.3 billion deal to purchase IBM's x86 server business is still awaiting approval from the US government six months after the acquisition was announced. Sources familiar with the matter described the negotiations as "extremely difficult", although top executives of Lenovo expressed optimism that the deal will be closed by the end of this year.

Ren Zhengfei, founder and president of Huawei, criticized the US in a rare interview in June." The US does not want to see a strong China," Ren said. "Huawei is not what the US really wants to target. What they want is to strike at China."

Local firms can benefit from Windows 8 ban

Inspur Group trying for IBM customers

The telecom equipment maker has shifted its overseas focus toward Europe after years of failed attempts to sign a deal in the US because of security barriers.

Analysts said the US companies are facing a similar situation in China. Microsoft, IBM and Cisco Systems Inc have expressed concerns to China Daily about recent restrictions. But the companies seem unable to deal with the issue, because they can't influence policy in China.

"Of course, we value the Chinese market and have a strong willingness to serve government and SOE customers. I hope my colleagues from our government relations team can persuade industry regulators and bring our customers back," said a senior IBM manager who sells enterprise software in China.

"I am not optimistic about our business in government procurement projects because we are obviously not in favor," he told China Daily on condition of anonymity because the matter is sensitive.

While the national security issue casts a shadow over US companies, Chinese tech enterprises are eyeing business that previously belonged to foreign competitors.

Inspur Co Ltd, a Jinan, Shandong-based server manufacturer, saw its China x86 server shipments nearly quadruple in the first quarter of this year, according to industry researcher Gartner Inc.

The company's price advantage and local customers' security concerns helped drive the surge, according to Gartner, adding that Inspur's market share is poised to increase in the coming quarters.

Kingsoft Co Ltd, a Beijing-based software firm, aims to sell more than 70 percent of its office software through government purchase deals this year after reports said Microsoft's Office suite had been abandoned by State-level organizations.

Kingsoft sold two-thirds of its own version of Office to the government last year.

"The push to use Chinese IT products has offered a golden chance for local companies to gain ground,"said Zhang Yumu, vice-president of Beijing Rising Information Technology Co Ltd, the largest local security software provider.

Government agencies, SOEs and organizations serving key industries such as energy, healthcare and finance will be the first batch to use domestic products, solutions and services, analysts said.