For­eign tech firms to face tougher times

China Daily (Canada) - - CHINA - By GAO YUAN gaoyuan@chi­

For­eign tech­nol­ogy com­pa­nies will have a hard time in China — at least in the short run — af­ter the world’s largest com­puter and In­ter­net mar­ket is set to im­pose a re­view pol­icy on im­ported net­work and tech­nol­ogy equip­ment and ser­vices.

The coun­try will launch a cy­ber­se­cu­rity test­ing pro­gram on ma­jor in­for­ma­tion tech­nol­ogy prod­ucts and ser­vices used in na­tional se­cu­rity and other pub­lic in­ter­est seg­ments, a govern­ment state­ment said on Thurs­day.

An­a­lysts said the an­nounce­ment comes as China con­fronts the United States on In­ter­net safety is­sues.

Most of the leading for­eign play­ers in China’s tech­nol­ogy mar­ket are based in the US, in­clud­ing Cisco, Mi­crosoft, IBM, In­tel and Or­a­cle.

Gene Cao, se­nior an­a­lyst at For­rester Re­search, said: “With tight­en­ing su­per­vi­sion mea­sures on over­seas IT prod­ucts in govern­ment pro­cure­ment, businesses in the af­fected sec­tors will be less will­ing to buy from for­eign com­pa­nies.”

Mi­crosoft, Cisco and Ju­niper Net­works de­clined to com­ment on Thurs­day.

“I don’t think the vet­ting pro­gram will have any big im­pact on IBM’s busi­ness in the coun­try,” said an anony­mous source at the US com­pany. “We have been pro­vid­ing IT prod­ucts in mis­sion-crit­i­cal sec­tors such as fi­nance. An in­dus­try-level IT sys­tem test­ing mech­a­nism has been in place for many years.”

Less than a week ago, China barred newly pur­chased govern­ment com­put­ers from in­stalling Win­dows 8. Mi­crosoft de­scribed the de­ci­sion as “un­ex­pected”.

It is clear the govern­ment wants to see a higher adop­tion rate of lo­cal IT prod­ucts. But years of of­fi­cial sup­port failed to pro­duce IT prod­ucts strong enough to chal­lenge global gi­ants.

In Fe­bru­ary, Red Flag Soft­ware, once the largest Lin­uxbased soft­ware ven­dor in China, closed be­cause of poor fi­nan­cial per­for­mance.

The com­pany, backed by the Chi­nese Academy of Sci­ences, was the big­gest chal­lenger of Win­dows sys­tems in China, but it gained only a lit­tle brand aware­ness, even in State-con­trolled govern­ment projects.

Tech­no­log­i­cal ad­van­tages may help over­seas com­pa­nies to sur­vive in China de­spite tight­en­ing reg­u­la­tions, an­a­lysts sug­gested.

“For­eign ven­dors should lo­cal­ize more prod­ucts and ser­vices in the coun­try,” said Cao from For­rester.

“They need to op­er­ate in China like lo­cal com­pa­nies do.” Xin­hua con­trib­uted to this story.

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