China Stops Buying Western Brands

Reuters is reporting that the Chinese government has removed a number of Western technology vendors products from the approved list.

Whether this is due to Western surveillance or just due to their desire to support local companies is not clear – they are not saying.

What they are saying is that Chinese companies “offer more product guarantees that overseas rivals”.  Translating that, we can look at their code and hardware to see if we like it.

Cisco used to have 42 products on the approved list.  Now they have none.  Bloomberg reports that Cisco did about $2 Billion in sales in China out of about $48 billion worldwide.

Apple and Intel have also been dropped off the approved list.  In fact, the number of Western companies has fallen by one third and the number of Western companies selling security products has fallen by half.

There are many very smart Chinese engineers.  For the government to use their smarts with the government’s money to control the software and hardware that secures their infrastructure makes perfect sense.

Microsoft is off the list as well, but since most Microsoft software used in China is pirated, that probably won’t impact usage of Microsoft products.

This is a bit of a double whammy.  Obviously it impacts sales for companies like Cisco.  Cisco has announced it will layoff around 6,000 employees or 8 percent of it’s workforce this year.  That will have a ripple effect on the economy.

The other part is that the NSA has already figured out how to hack Cisco products, so now they have to go back to work to figure out how to hack the Chinese products.  The good news is that this is likely not hard since many Chinese network products look like a clone of Cisco gear.  If you put a network engineer in front of some Chinese network equipment, they would not know that they are not working on a piece of Cisco gear. 🙂

Mitch

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