Chinese government removes Apple and other U.S. vendors from state purchases list

February 26, 2015

The Chinese government has removed Apple along with other prominent U.S. technology vendors from its state purchase lists in favor of local vendors. According to Reuters, the change comes on the heels of cybersecurity concerns, with Chinese government officials reported to be wary of surveillance from Western government agencies.

Other US technology firms whose products were removed include networking equipment manufacturer Cisco, Intel's McAfee and network and server software maker Citrix. The report highlights how the total number of products on the Central Government Procurement Center (CGPC) list increased by 2,000 to nearly 5,000 from 2012 to 2014, with a bulk of the new products manufactured by local vendors:

The number of products on the list, which covers regular spending by central ministries, jumped by more than 2,000 in two years to just under 5,000, but the increase is almost entirely due to local makers.

The number of approved foreign tech brands fell by a third, while less than half of those with security-related products survived the cull.

An official at the procurement agency said there were many reasons why local makers might be preferred, including sheer weight of numbers and the fact that domestic security technology firms offered more product guarantees than overseas rivals.

To allay security concerns in its consumer products, Apple moved Chinese users' iCloud user data to servers located in China, and reportedly agreed to a security inspection by China's State Council Informatization Office to remove doubts of any software backdoors that can be leveraged by the U.S. governement. However, anonymous sources cited by the Reuters revealed that the change was in fact enforced to favor Chinese technology firms:

"There's no doubt that the SOE segment of the market has been favoring the local indigenous content," said an executive at a Western technology firm who declined to be identified.

The executive said the post-Snowden security concerns were a pretext. The real objective was to nurture China's domestic tech industry and subsequently support its expansion overseas.

China also wants to move to a more consumption-based economy, which would be helped by Chinese authorities and companies buying local technology, the executive said.

Source: Reuters