The Chinese government has ordered its Government, State Firms to dump foreign-branded personal computers with domestic alternatives within the next two years.
This is part of the country’s domestic plan to replace imported technology with local alternatives. Staff have been asked to exchange foreign PCs for domestic alternatives that run on operating software developed in the country.
The policy is estimated to eventually lead to the replacement of around 50 million PCs in the central government alone. The new initiative will involve dismantling the presence of HP and Dell Technologies, which are the country’s biggest PC brands after local provider Lenovo.
China has long pursued a strategy of encouraging the use of domestic IT products in government agencies. To combat this, US tech giants like Microsoft and HPE have set up joint ventures with firms backed by the Chinese government in order to continue receiving orders from the richest state-owned companies.
PC shipments in China grew 9% in the last quarter of 2021 to reach 16.5 million units. This finished a year of strong growth for the Chinese market, which saw shipments rise 10% in 2021 to a record 57 million units. The top vendors were Lenovo with 41.8% of market share, Dell with 12.5%, HP with 9.2%, Asus with 5.5%, and Acer with 5.2%.
China’s PC market is undergoing upheaval due to public sector interventions, but the strong growth seen in 2021 emphasises how big an opportunity there still is,” said Emma Xu, Canalys analyst. “Security concerns about government procurement are growing, and there is a preference for local vendors, which puts additional competitive pressure on US-based vendors, such as HP and Dell.”
The decision advances China’s decade-long campaign to replace imported technology with local alternatives, a sweeping effort to reduce its dependence on geopolitical rivals such as the US for everything from semiconductors to servers and phones. It is likely to affect sales by HP Inc and Dell Technologies Inc, the country’s largest PC brands after local champion Lenovo Group Ltd
The directive is expected to cover only PC brands and software, and exclude hard-to-replace components such as processors from Intel and AMD. China also plans to encourage the use of Linux-based operating systems in an effort to replace Microsoft Windows. A top provider of these tools is Standard Software, based in Shanghai.
With the new role coming into force, specific agencies may continue to buy advanced foreign equipment under special permits as they always have, but the permit system could be tightened in the future. State-backed corporations that could be affected by this policy include TCL Technology, the Shanghai Data Exchange, and public transport operator MTR Corporation.
The policy is said to be the result of growing concerns within the Chinese government around information security and confidence in its homegrown hardware. Some of the world’s biggest laptop and server makers stand to benefit, including Lenovo, Huawei, and Inspur, while local developers like Kingsoft and Standard Software are hoping to take larger chunks of the market away from Microsoft and Adobe.
