Technology companies like Apple, Intel, and Cisco are on the Chinese government’s state purchase blacklist, according to a recent report by Reuters. Anti-virus software companies like Kaspersky Lab and Symantec Corp. are banned from China’s state purchase list, as well.
On the other hand, China approved state purchases from thousands of their local technology companies. A Chinese procurement agency official offers a variety of reasons why local manufacturers are preferred over foreign technology companies.
One reason is attributed to the large number of local technology companies in China. In addition, China contends that domestic security technology companies offer greater product guarantees, as opposed to foreign technology companies.
Apple Inc., Intel Corp., and Citrix Systems have experienced a dramatic decline in China’s purchases lately. The technology company hardest hit by the recent purchase list exclusion is Cisco.
According to official data provided by Reuters, in 2014 Cisco Systems Inc. did not have any of their products on the Central Government Procurement Center’s list for China, whereas, 60 Cisco products were sold to the Chinese governement in 2012.
A Cisco spokesperson offered the following comment.
“We have previously acknowledged that geopolitical concerns have impacted our business in certain emerging markets.”
Some experts suggest leading U.S. technology companies were blacklisted because of U.S. National Security Agency (NSA) security leaks of former contractor Edward Snowden in 2013.
Last year, Bloomberg reported China might retaliate due to the NSA spying program, which resulted in five Chinese military officers being indicted for allegedly stealing corporate secrets. In wake of the cyber security incident, the Chinese media criticized Apple Inc. and Google Inc. for allegedly cooperating with U.S. spying, resulting in Microsoft Corp. being excluded from a government purchasing order.
For some time now, China and the United States have accused each other of cyber security abuses. Last month, a few U.S. technology companies addressed their concerns about some of the new Chinese cyber security regulations when they put the Chinese administration on notice.
A few of the major concerns pertain to U.S. technology companies having to use Chinese encryption algorithms, being forced to use Chinese banks, and having to fork over secret source code to the Chinese government.
Experts also contend that China is attempting to increase the growth of Chinese technology companies and expand their presence in the information and communication world market. According to International Data Corporation (IDC), an American marketing research firm, Chinese technology companies are expected to reach $465.6 billion in 2015.
Some industry experts suggest domestic Chinese technology companies are inferior to foreign technology leaders, resulting in increased cyber attack vulnerability.
Beijing’s Wang Zhihai, president and CEO of Wondersof told Reuters how far behind China is with respect to information security.
“In China, information security compared to international levels is still very far behind; the entire understanding of it is behind. In 10 or more years, that’s when we should be there.”
In the mean time, U.S. technology companies are working with Chinese authorities to resume operating in the country. However, if China is retaliating, who knows how long the Chinese government will hold out and maintain their boycott.
[Featured image courtesy of Kevin Frayer/Getty Images]