“China has dropped some of the world’s leading technology brands from its approved state purchase lists, while approving thousands more locally made products, in what some say is a response to revelations of widespread Western cyber-surveillance,” Paul Carsten reports for Reuters. “Others put the shift down to a protectionist impulse to shield China’s domestic technology industry from competition.”
“Chief casualty is U.S. network equipment maker Cisco Systems Inc, which in 2012 counted 60 products on the Central Government Procurement Center’s (CGPC) list, but by late 2014 had none, a Reuters analysis of official data shows,” Carsten reports. “Smartphone and PC maker Apple Inc has also been dropped over the period, along with Intel Corp’s security software firm McAfee and network and server software firm Citrix Systems… The number of approved foreign tech brands fell by a third, while less than half of those with security-related products survived the cull.
“China’s change of tack coincided with leaks by former U.S. National Security Agency (NSA) contractor Edward Snowden in mid-2013 that exposed several global surveillance program, many of them run by the NSA with the cooperation of telecom companies and European governments,” Carsten reports. “‘The Snowden incident, it’s become a real concern, especially for top leaders,’ said Tu Xinquan, Associate Director of the China Institute of WTO Studies at the University of International Business and Economics in Beijing. ‘In some sense the American government has some responsibility for that; (China’s) concerns have some legitimacy.’ U.S. tech groups wrote last month to the Chinese administration complaining about some of its new cybersecurity regulations, some of which force technology vendors to Chinese banks to hand over secret source code and adopt Chinese encryption algorithms.”
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MacDailyNews Take: The shorts will attempt to push AAPL down on this news, but Apple sells mainly to Chinese consumers. Apple Retail Stores continue being built and opened throughout China. Apple will be just fine.