New H3C Group targets government procurement deals

An attendee walks past a poster of Hewlett-Packard Enterprise at Guiyang International Big Data Exhibition, May 28, 2015. [Photo/CFP]

New H3C Group, a newly formed joint venture between State-owned Unisplendour Corp and Hewlett-Packard Enterprise, will be targeting emerging technologies and government procurement deals to boost sales, company executives said on Friday.

The information infrastructure provider headquartered in Beijing and Hangzhou is preparing to fight off challenges from overseas giants such as Cisco Systems Inc and Dell Inc, taking advantages from closer ties with the government and technologies from HPE.

Tony Yu, president and CEO of New H3C, said his priorities include keeping the firm's top ranking in the Chinese enterprise market while transforming the company from a hardware maker to a software developer and provider of related services.

"We will add investments to develop new technologies in 5G, robotics and virtual-reality sectors when the time is right," said Yu.

HPE, an enterprise technologies provider spun off from personal computer giant Hewlett-Packard Co in 2015, sold 51 percent of the stake in H3C Technologies Co Ltd to Unisplendour Corp Ltd for at least $2.5 billion last year. The JV also includes HPE's server, storage and service units on the Chinese mainland.

Beijing-based Unisplendour is an IT arm controlled by Tsinghua Unigroup Co Ltd, which was set up by Tsinghua University, the country's elite educational institute where a long list of tech tycoons and government officials were graduated.

Victor Zhao, chairman of Tsinghua Unigroup, said supports from the Chinese government were a key reason for Unigroup to complete the purchase.

"The founding of New H3C is a milestone for the Chinese IT industry and will benefit national security," said Zhao.

"Chinese companies are taking bigger control of the JVs they set up with overseas multinationals and local development and management teams are deeply involved in daily operations now than 20 years ago."

Top technology providers are set to become core players in China as competition heats up, said a report from the industry consultancy International Data Corp.

"Because an SOE (State-owned enterprise) is controlling the majority stakes of New H3C, the company will significantly increase the chance of winning government procurement deals," it said.

Kitty Fok, director of IDC China, said the founding of New H3C marks the beginning of a new round of competition because the biggest overseas giants have all tied up with their local partners.

"An SOE identity and cutting-edge technologies are both necessities to win in the Chinese market," said Fok.

China is on high alert over information safety since whistleblower Edward Snowden unveiled the massive surveillance program from the United States. Cisco and other overseas tech companies reported slumps of new orders in China because increasingly strict security requirement made them difficult to sell products to government organizations and SOEs, both key buyers of servers, storages and cloud-computing equipment.

Cisco later moved to partner with Shandong-based Inspur Technologies Co Ltd to stay relevant in the world's second-largest economy. California-based Juniper Networks Inc also joined hands with Chinese PC maker Lenovo Group Ltd in a bid to tap into the data center business.