China office worker

China plans to dump 50m foreign PCs within the next two years

The country is also reportedly planning to phase out Windows in favour of Linux
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Image: Getty via Dennis

9 May 2022

The Chinese government has reportedly ordered its central agencies and state-backed corporations to replace 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, as reported by Bloomberg.

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.

 

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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.

PC shipments in China grew 9% in the last quarter of 2021 to reach 16.5 million units, according to Canalys. 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 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.

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.

Under the new rules, 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.

In the past, users in China had to rely on imported equipment due to inadequacies in Chinese-developed software. This has changed in the last few years, with local manufacturers like Lenovo and Inspur gaining global market share, although their products continue to rely on important US-made components like processors from Intel or AMD.

The West has been distancing itself from Chinese tech companies in recent times. In November 2021, the US Department of Commerce added a dozen Chinese tech companies to its trade blacklist to prevent the Chinese army from gaining access to critical US technologies.

The telecommunications industry has also seen significant disruption following a shift in western policy towards companies seen to be too closely tied to the Chinese government. This famously resulted in a ban of the use of Huawei equipment in a number of territories, including the US and the UK.

© Dennis Publishing

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