More domestic players to fill tech void

A pedestrian walks by a Cisco sign outside of the office headquarters in San Jose, Calif. Aug 9, 2010. [Photo/IC]

China is set to drop government purchases of foreign technology products as part of the national strategy to ensure information safety, according to experts.

Observers said more local brands will be added to the government procurement list in coming years to fill the void left by overseas competitors such as IBM, Microsoft and Cisco Systems.

IT products produced by IBM and Microsoft remain “active for purchase” but no Cisco equipment is available, according to information on the Central Government Procurement Center’s website. Cisco had 60 products on the State procurement list in 2012, according to a Reuters report.

A long list of domestic companies has entered the highly profitable sector in recent years, including giants such as ZTE Corp, Lenovo Group and Huawei Technologies Co and an array of small players.

Companies including IBM, Cisco and Intel Corp did not comment directly on the issue on Thursday.

Cisco said that geopolitical concerns have had an impact on its business, while Intel said it is working with the Chinese government on many levels, without providing details. The procurement center also did not comment.

Zuo Xiaodong, vice-president of the China Information Security Research Institute, a government think tank, said it is clear China wants more domestic IT products to replace overseas technology, over which the country has no control.

“Using more products made by Chinese companies in critical sectors makes Beijing feel safer about information security,” Zuo said.

Late last year, media reports said China will drop overseas IT products and services from government procurement by 2020.

Zuo said regulators have no clear time frame for abandoning foreign products, but the country is clearly in favor of domestic players.

Miao Wei, chief of the Ministry of Industry and Information Technology, said self-developed IT products are critical to improving information security in China.

Foreign Ministry spokesman Hong Lei said on Thursday that China welcomes overseas enterprises exploring business in the country, as long as they abide by Chinese laws.

Industry insiders said China may ask IT companies for critical technologies, such as source codes, before allowing them to join government-backed projects — including those from State-owned enterprises.

Kitty Fok, director of research firm IDC China, said more overseas IT companies will seek partnerships with local players to tap into the government procurement market.

“China is not the same as it was a decade ago, and a business model based on simply selling pre-existing products to the Chinese market is not necessarily going to work,” Fok said.