25 August 2019

Can China afford to shun foreign IT products?

With Beijing ratcheting up pressure on foreign technology firms, particularly those from the US, due to perceived national security threat, the question arises: Is China really in a position to shun IT hardware and software developed overseas?

The answer, according to neutral observers, is an unequivocal ‘No’. They argue that political factors are guiding the decisions of mainland authorities, rather than any sound economic logic or the actual ground realities.  

The world’s second-largest economy has no doubt made impressive strides in many areas, but it is still a long way off from being able to sustain itself with homegrown technologies and hardware.

While Chinese firms have gained the ability to develop software for electronic gadgets, and telecom equipment makers have carved out significant international market share on the back of cheaper prices, the country’s strength in the global IT world doesn’t actually amount to much.

In the mobile device market, for instance, US firms Apple and Google, with their software and operating systems, control almost 95 percent of the world’s smartphone and tablet devices, including those manufactured by Chinese firms like ZTE, Huawei and Lenovo.

Given this situation, reports Wednesday of a salvo from Beijing on Apple have led to some wariness in the market. 

Bloomberg reported, citing sources familiar with the matter, that China has excluded some Apple products, including iPad and Macbook devices, from the government procurement list due to national security concerns.

Some Chinese government officials later told local media that Bloomberg misinterpreted the procurement list, and clarified that the government has not banned Apple products for official use.

If authorities wanted to ban foreign products, they would have barred all overseas brands, why just Apple, the officials said. Firms like HP and Dell are said to be still on the list of approved vendors.

While there is some confusion regarding the Apple issue, there is however no doubt that Beijing is wielding the stick against foreign tech firms.

Earlier this week, China struck off US-based Symantec and Russia’s Kaspersky Lab from the list of approved anti-virus software vendors. Apparently, there are fears that foreign governments could use the anti-virus software to spy on Chinese entities. 

Spying fears were also said be behind the move to curb Apple products, but skeptics point out that China’s big three telecom operators are still selling the iPhone. The telcos will want to continue cooperation with Apple if they are guided by commercial interests, rather than political factors.

China Mobile, the nation’s largest mobile operator, had been seeking a tie-up with Apple for more than five years to push homegrown 3G technology. But it was only in January this year that both parties inked an agreement, as Apple assured that it will launch products compatible with China’s homegrown 4G and 3G technologies as well as global mobile standards.

If Apple was a dangerous entity, why would China Mobile ink a deal with that firm, observers ask.

While it remains to be seen how things will unfold in future, experts say it will be disaster if Beijing curbs the sale of Apple products in the nation. If Apple products can threaten national security, so will the smartphones running on source code provided by Google’s Android operating system.

The list of Chinese handset makers that use Android include top names such as Lenovo, Xiaomi, ZTE and Huawei. Lenovo, meanwhile, also uses Microsoft’s Windows operating system on its computers.

There is no ground for Beijing to impose a ban on foreign tech products, given the fact that many Chinese firms and consumers are relying on those products for communications and corporate use.

The truth is that China is yet to develop its own core software technology for computers and mobile phones.

Domestic brand Xiaomi beat Samsung and Apple in smartphone sales in the second quarter, but the Chinese firm’s core hardware and software technologies are still from overseas.

A slogan “Use Chinese made products to show your patriotism” has been in circulation in the country for more than decade to show the rising power of China. But the reality is that the country is still a long way from catching up with foreign powers in technology development.

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EJ Insight writer

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