UPDATED 06:50 EDT / JULY 02 2014

Big trouble for US firms in China: Locals turn to home-grown tech

china-112116_640American tech providers have long been enraptured with the idea that there’s a monolithic business opportunity in China, so long as they’re prepared to bend over backward to conform to the various rules and regulations that set the country apart from others.

But according to Frank Liu, an analyst specializing in Big Data and converged infrastructure within the Middle Kingdom, that idea could be old-school thinking.

In light of recent reports that China is clamping down on US tech firms, Liu issued a warning to Chinese IT professionals yesterday that they might need to start looking closer to home when they go shopping for any new hardware.

Liu cites recent moves by the Chinese government, such as its decision to ban Windows 8 from certain government departments, and an investigation into IBM, Oracle, and EMC launched last August in light of Edward Snowden’s NSA leaks. China is reportedly very anxious that the US might be sneaking backdoor surveillance technologies into US made gear in order to spy on its companies’ and government’s activities.

In an interview with SiliconANGLE last month, Ben Cavender of the China Market Research Group warned that China’s stance will certainly have an impact on US technology providers. “Replacing some of the foreign providers will be difficult but at this stage there are more and more home grown solutions that China can rely on,” said Cavender.

That seems to be happening already. In his analysis, Liu argues that Alibaba’s decision to move away from EMC storage, IBM servers and Oracle databases to PCIe storage, X86 servers and open-source databases will set a trend for other Chinese firms to follow. With vendors like Inspur now offering like-for-like replacements for IBM’s servers, a large-scale shift to domestic suppliers could soon become reality, Liu warns.

Liu says that some companies are already feeling the pinch in China, although there do remain some positives. “In key areas like mainframe computing, applications, and databases, there are almost no domestic vendor alternatives,” notes Liu. He also says that Chinese businesses are sensible enough not to push the replacement of crucial and complex applications like core banking systems too quickly. Which means that those specializing in these areas can breathe easy, for a while at least.

However, Liu insists we’re seeing the beginning of a trend toward buying from local suppliers where possible, and he says local companies will need to fall in line.

If Chinese companies do heed Liu’s advice and shop at home, local vendors will soon build up a fine collection of customer references that should impress buyers outside of its borders. With firms like Huawei and Lenovo already biting into the enterprise space, China’s move to dampen US firm’s growth opportunities will only help to stir things up even more.

Image credit: Geralt via Pixabay.com

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