China Seeking to Drop the Biggies in Favour of Local Suppliers

Foreign Technology Vendors Have Reason to be on the Edge

Here is a Bloomberg report that shows China is stepping up effort to purge most foreign technologies and shift to local suppliers by year 2020. They now even have an alternative to Windows.

That is another initiative for the Narendra Modi government in India to copy!

From nuclear work and engines for fighters to servers / routers and medical devices, China is making a big push for tapping home-grown companies. Not only does it give indigenous products a boost it also offers China less worry over any compromise on security that an engagement with foreign companies for such products and servers could bring.

That will be a matter of unease for American and Western companies such as Cisco Systems, IBM, Microsoft and Intel as they could end up facing a drought when bidding for major projects in China.

Beijing Olympics

For big events such as the Beijing Olympics in 2008, China did go for Cisco gear as it may not have wanted to take a chance with new kids on the block.

Perhaps, the next time it hosts a similar event international players may have to think of staying clear from it to save on pursuit costs as their win probability will be less competing with Chinese companies.

Knowledge Transfer

Knowledge transfer is a key requirement in bids that shortsighted vendors comply with and that has served China well. With the knowledge gained from projects with MNCs the country has been able to groom local companies.

Also, companies in the U.S. have used foreign scientists and engineers, including those from China. for development of various technologies. That has enabled them to transfer intellectual property for use in China.

My experience managing bids for such projects in China in the past suggests that this is a process that may have begun long ago. For instance, companies such as Huawei would flash recommendation letters from the Chinese government to consider their products. China has always gone out of its way to enable the success of home-grown companies.

Western multinationals, on the other hand, have no such threats in India which has no competing locally-made products to challenge them. India even ignores inherent security threats to go with Chinese technology firms.

The West has regularly talked about human rights abuses and the lack of freedom of expression in China even while blaming it for supplying weapons for terror sponsors such as Pakistan. But that has not prevented them from pumping billions into China to suit their own selfish business ends.

Another Relevant post: Aping China, the mission of New India

G Joslin Vethakumar


Leave a comment

Filed under News and politics, Strategy and Business

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s