China's move to domestic software pressures foreign companies

Updated: 2014-07-01 02:04

By Gao Yuan (China Daily)

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China's move to domestic software pressures foreign companies
WPS office, developed by Kingsoft Co Ltd, is one of the most popular office software products in China. [File photo/China Daily]

The government's rising fears over information safety may further cut the market share for overseas software enterprises in government procurement, a major profit source for global giants including Microsoft, Adobe and Oracle, analysts said on Monday.

Their remarks followed a China Securities Journal report that China is ruling out Microsoft's Office software suite from some State-level government agencies, citing unnamed sources.

The US company quickly rejected the report as "completely untrue".

"We have contacted the Ministry of Finance, the governing body of government procurement projects. They had no idea of the ruling as well," a senior Microsoft executive told China Daily on condition of anonymity because the matter is sensitive.

Microsoft is working closely with the Chinese government to protect its business in the sector, the source added.

The Office suite was still available for purchase on the Central Government Procurement Center's site as of Monday evening.

But overseas software products will feel increasing pressure in getting government orders as local players are set to win over market share in the long run, industry insiders warned.

"The incident shows increasing concerns about information security by the Chinese government, from both infrastructure and application perspectives, especially considering the increasing terror attacks in the country," said Charlie Dai, principal consulting analyst at Forrester Research.

"More organizations in the public sector — including State-owned enterprises, governments, power utilities, healthcare and financial institutions — will more likely adopt domestic products, solutions and services," Dai said.

Beijing-based software company Kingsoft has been eyeing Microsoft's share of Chinese government purchases for a long time.

The developer of WPS, a local equivalent of the Office suite, hopes to sell more than 70 percent of its office applications through government purchase deals this year.

Kingsoft sold two-thirds of its WPS products to the government in 2013.

But Dai said, "I don't think any domestic software could easily replace Microsoft Office because the software has been tightly integrated into many business applications and business processes of the Chinese government and State-owned enterprises."

Beijing has sped up its pace of ousting made-in-US IT products from key industries and organizations since the US government in May accused five Chinese military officials of cyberespionage.

China denied the charges and in the following days announced a ban on Windows 8 in government procurement.

China's move to domestic software pressures foreign companies

China's move to domestic software pressures foreign companies

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