According to government tenders, research documents, and four people familiar with the situation, China has increased expenditures to substitute domestically produced technology with Western-made equivalents as Washington tightens restrictions on high-tech exports to its rival.
Increase In Domestic Substitution
Details of tenders from the military, administration, and state-affiliated organization’s are being reported by Reuters for the first time, and they demonstrate a rapid increase in domestic substitution since last year.
According to two people with knowledge of the sectors, China has been spending a lot of money replacing computer equipment, and the financial and telecom sectors are likely the next targets. A study of the work of state-sponsored researchers revealed that they also noted that digital payments were especially susceptible to potential Western hacking.
In the 12 months following September 2022, the number of tenders from government and military agencies, state-owned enterprises (SOEs), and other entities to nationalize equipment doubled to 235 from 119, according to a finance ministry database viewed by Reuters.
Speaking on condition of anonymity due to the sensitive nature of the subject, three sources acquainted with China’s enterprise tech sector stated that Huawei, a Chinese tech behemoth, has emerged as the dominant company in this replacement cycle.
With software and cloud computing activities, Huawei’s enterprise unit recorded sales of 133 billion yuan in 2022, a 30% increase from the previous year.
Entire software industry subsectors have seen a complete redraw due to the replacement drive. Industry group IDC reports that by the end of 2022, the total market share of five significant foreign database management system manufacturers, the most of which are American, fell from 57.3% in 2018 to 27.3% in China.
In the realm of banking and telecom database management, foreign companies continue to have a strong position despite significant investments in domestic alternatives. By the end of 2022, non-Chinese enterprises accounted for 90% of the market share for financial database systems, according to IT consultant Equal Ocean.