China planning to purge foreign tech from the enterprise and replace with homegrown suppliers

“China is aiming to purge most foreign technology from banks, the military, state-owned enterprises and key government agencies by 2020, stepping up efforts to shift to Chinese suppliers, according to people familiar with the effort,” Bloomberg News reports. “The push comes after a test of domestic alternatives in the northeastern city of Siping that was deemed a success, said the people, who asked not to be named because the details aren’t public. Workers there replaced Microsoft Corp.’s Windows with a homegrown operating system called NeoKylin and swapped foreign servers for ones made by China’s Inspur Group Ltd., they said. The plan for changes in four segments of the economy is driven by national security concerns and marks an increasingly determined move away from foreign suppliers under President Xi Jinping, the people said. The campaign could have lasting consequences for U.S. companies including Cisco Systems Inc., International Business Machines Corp., Intel Corp. and Hewlett-Packard Co.”

“China is moving to bolster its technology sector after Edward Snowden revealed widespread spying by the U.S. National Security Agency and accused the intelligence service of hacking into the computers of Tsinghua University, one of the China’s top research centers,” Bloomberg reports. “Foreign suppliers may be able to avoid replacement if they share their core technology or give China’s security inspectors access to their products, the people said. The technology may then be seen as safe and controllable, they said. China ranks second behind the U.S. in technology spending, with outlays rising 8.1 percent to $182 billion last year, according to research firm IDC. The U.S. spent $656 billion, a 4.2 percent increase over 2012.”

“‘I see a trade war happening. This could get ugly fast, and it has,’ said Ray Mota, chief executive officer of Gilbert, Arizona-based ACG Research, who expects the issue to result in direct talks between the U.S. and China. ‘It’s not going to be a technology discussion. It’s going to be a political discussion,'” Bloomberg reports. “Other cities and agencies in Jilin will now begin testing whether NeoKylin, a Linux-based operating system from China Standard Software Co., can substitute for Windows and servers made by Inspur can replace IBM’s, the two people familiar with the plan said. The trial will then expand across the country, they said.”

Read more in the full article here.

MacDailyNews Take: Patented intellectual property be damned, as always.

46 Comments

  1. Gee, what a surprise. The US government inserts backdoors into US made hardware that goes to foreign nations. Snowden spills the beans and now the foreign nations want nothing to do with US stuff. Can you blame them!

    Talk about shooting yourself in the foot. One of the bright spots in the US economy was hi-tech. Now, thanks to the NSA and the other corrupt US government spy agencies, our economy will take another kick in the ass.

    1. “…thanks to the NSA and the other corrupt US government spy agencies, our economy will take another kick in the ass.”

      More kudos to  for anticipating the backlash against government surveillance and their push for encryption of private data..in the next 2-3 years, I see privacy of digital devices as the #1 selling point for a tech company.

    2. exactamundo.

      so while they sucker us into manufacturing our stuff over there, they not only get to steal our technology, but also – i would guess – have the opportunity to insert backdoors into out technology which they will be able to exploit once it is back on american soil.

      remember lenin’s words

      “the capitalists will sell us the very rope we will use to hang the”

        1. oh, now botty, let us not be too dogmatic…

          after all they did beat us into space with sputnik and yuri gagarin.

          now true enough they did it aided by captured nazi scientists, but isn’t that how we got there too? just take a look at the 1950’s huntsville alabama phone book.

          not to mention our economy coming out of ww ll amounted to 50% of the entire world economy, and russia ?…. not quite so much. they lost 20 million people and we lost 400,000

          might have been some very innovative people lost to the world, on either side.

          give the devil his due.

          1. In general, I agree, although with respect to the space programme, Americans poached pretty much the entire scientific capacity of the Nazi Germany (headed by Werner von Braun), which was the main reason for their successful participation in the space race. Soviets had practically no Nazi German scientists on their team; Korolyov was their equivalent of W. von Braun, and many argue, had he lived for a few more years, the Soviets would have been the first to the moon as well (in addition to all prior first: first in space, first in orbit, first space walk, first rendez-vous, longest space flight…).

            1. Based upon my knowledge of Soviet space history, their Moon program was unlikely to result in successful and reliable human lunar missions. They adopted the approach of clustering smaller engines to achieve greater liftoff thrust. However, that approach scales poorly in terms of complexity and risk. When you have two or three dozen engines on your first stage, the likelihood of a catastrophic engine failure propagating into loss of vehicle is significantly increased. In addition, the complexity of engine interactions is increased in the base area of the rocket. The American approach that used a cluster of five, much larger F-1 engines proved to be a wiser choice. And even that much simpler engine configuration proved to be challenging in terms of pogo and base recirculation, heating, and vibroacoustics.

            2. I’ll most certainly take your word on that one; I know next to nothing on the subject matter, and you clearly sound like you know what you’re talking about.

              What I can say is (generally in agreement with you) that the Soviets would have likely needed a lot of luck in order to pull it off. Their programme generally had much narrower safety margins than the NASA’s.

    1. I certainly feel safer knowing that every innocent citizen is being watched by the hawks. The Constitution didn’t foresee the dangers of that dread day when free speech would mean people could talk to each other privately over a network.

      /s

      But the internet is going to go dark because of this. Encrypted email, and every other kind of communication is the inevitable result of the NSA’s overreach.

      Please Apple, match the security of iMessage with a new encrypted email standard! Text-over-internet technology in need of a reinvention.

    1. While China has more reason today to switch to Chinese tech than ever, they have announced initiatives like this every few years for a few decades. It turns out local competitive technology is not something governments can just turn on like a faucet.

      Personally I think products should come with little stickers letting customers know which government’s spy network it belongs too. Choice in the marketplace, please! Let customers decide! 🙂

    2. China has huge numbers of talented engineers (along with even more decidedly average ones) Genuine Chinese innovation is already taking place and as Chinese intellectual property grows the government will start to improve laws to protect it. 100 years ago the Europeans were complaining about American companies stealing their intellectual property. Once you catch up you start to follow the rules. That is just human nature.

      1. If the Chinese government can keep out of the way and stop killing personal incentive with its dire level of socialism, which I recognize is slowly happening, Chinese people will get off the crime incentive racket and start returning to actual creativity. That’s what I want to see. I hope your theory holds true for them. Meanwhile, the Chinese are still stuck with a government that insists up on the nonsense called ‘communism’.

        It’s certainly a more complicated situation. But around here I try for bit bites for simplicity and conversation.

        1. If there ever can be an historical example of the fruitlessness of collectivism and tyranny, Cuba is it. Notwithstanding, East and West Berlin:

          All free men, wherever they may live, are citizens of Berlin, and therefore, as a free man, I take pride in the words, ‘Ich bin ein Berliner’

  2. Thanks NSA. You won the battle but lost the war (and in the process undermined democratic rule and lost us a virtual global monopoly on enterprise tech worth trillions).

  3. Hope increased development in Robotics with 3D printing improvements can shift millions of jobs away from China. + move most textile jobs to smaller less threatening nations

  4. Really not surprising. There is the national security issue which was probably the main factor plus the ability to reduce cash flow out of the country by using homegrown solutions.

    Good job NSA.

  5. Just as I predicted a long time ago when reflection upon American companies prospects longer term in Asia. Not that it was rocket science to do so. What it confirms is that Apples strategy of relying on quality, style and desirability is the right one rather than chasing market share. The brands that do that are mostly doing very well in China and Asia where the increasing middles class see it as exotic and distinguishing them from the norm, while those that are not are already suffering or will be very soon as costs and political will eats them for breakfast..

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