The clash between two superpowers the US and China has been going through trade war for nearly two years. This trade war situation is affecting the tech companies from both countries. Recently the US imposed sanctions on Chinese tech company Huawei and ZTE because of security reasons.
China is pushing for self-sufficiency in technology as their long term vision. The Chinese government has banned foreign hardware and operating systems from their state offices and public institutions. And it would be replaced within the next three years. This is the most serious effort yet isolated from the influence of the western technology sector. Analysts at Jeffries say that US technology companies such as HP, Dell, and Microsoft generate as much revenue as $150 billion revenues from China by selling types of equipment to both government and private entities.
According to the Financial Times report in Chinese tech analyst, this call is not simply replaced American and European operating systems and software to Chinese equipment but the hardware then runs on as well. China has previously ordered and purchased US software but they are more limited and related to certain security issues. The relationship between the US and China has become strained, especially in the world of technology.
The call is to replace at least 30% of hardware and software in 2020, followed by 50% in 2021 and 20% at the end of 2022. The three years plan is ambitious and needs to replace millions of devices but that isn’t simple.
China’s exports are going down because of the trade war. However, many Chinese companies have been preparing for this eventuality for years. This will boost China’s manufacturing industry as the domestic demand will increase. This is a part of the larger initiative as China already had announced the “Made In China 2025” mission. With it, China aims to move away from being the “world’s factory” from producing cheap, low-quality goods due to lower cost to lower labor costs and move to produce high quality and higher value products and services.