China removes Cisco, Apple, Citrix, McAfee from government deals

Baburajan K

February 26, 2015

China has removed select products from Cisco, Apple, Citrix Systems and Intel’s security-software company McAfee, etc from its list of suppliers for government contracts over the past two years.

A Reuters article published on Wednesday said it includes 60 Cisco Systems products. Earlier, Cisco CEO John Chambers shared challenges in the Chinese IT market.

Select U.S. IT companies such as IBM and Cisco have already started to feel the heat due to the “Edward Snowden” impact.

Cisco in November 2014 said its Q1 FY 2015 revenue from the Asia-Pacific, Japan and China region declined 12 percent led by 33 percent dip in China income, while India revenue grew 6 percent. Cisco said its global revenue rose 1.3 percent to $12.2 billion, while net income dropped 8.4 percent to $1.8 billion in Q1 fiscal 2015.

IBM, which is not part of the Reuters report, said its Asia-Pacific revenues in Q4 2014 fell 17 percent to $4.9 billion. IBM revenues in the BRIC countries — Brazil, Russia, India and China — dipped 21 percent. IBM said its total revenue declined 12 percent to $24.1 billion, while net income fell 11 percent to $5.5 billion.

The Reuters report attributes the move to the disclosures of former U.S. National Security Agency contractor Edward Snowden about the NSA’s surveillance programs.

China’s dropping of products from Apple and others may be aimed at propping up the country’s domestic tech sector and supporting local firms. At present, India is also aggressively pushing for local manufacturing under a new initiative called Make In India program.

Reuters report said thousands of Chinese-made products have been added to the state procurement lists since 2012, while those from approved foreign brands have decreased by a third.

The move will benefit Chinese telecom equipment vendors such as Huawei, ZTE, Lenovo, etc. in the long run.