Foreign vendors face tighter controls

To win government deals, high-tech firms must disclose core operating data to regulators

Tighter controls on information technology products used in the financial sector may pose more hurdles for overseas companies in China, industry sources said on Jan 26.

Overseas companies like IBM Corp and EMC Corp will need to fully comply with the regulations if they want to win deals in the country, said the sources.

According to a report published in the Shanghai-based newspaper China Business News, the China Banking Regulatory Commission, the nation's banking regulator, is conducting a full-scale study across Chinese banks and large financial institutions to gauge the information security conditions. The research involves IT hardware, software and services, it said.

The government has indicated that it or other suitable organizations should have control over the technology used in financial organizations. According to a document released by the CBRC last year, China plans to have at least 75 percent of the IT products used in the financial sector under its control.

A source close to the commission said the regulator would also check the actual use of domestic software by lenders while assessing the safety of banks' information networks.

Several top Chinese lenders, including Bank of China Ltd, did not reply to China Daily's requests for comment.

IBM, EMC, Microsoft Corp and Hewlett-Packard Co are among the biggest overseas IT providers in China. A number of the products, including Microsoft's Windows 8.1 operating system, have been banned from government procurement projects because of security concerns.

Chinese vendors at the same time are making aggressive moves trying to fill the void left by foreign brands.

ZTE Corp, the communications equipment provider, and Inspur Group Ltd, a maker of servers, have announced "breakthroughs" in self-developed IT products that can be used in critical industries including banking.

The only way for overseas IT companies to win government procurement deals is to fully cooperate with the government and disclose core operating data to regulators, says Zuo Xiaodong, vice-president of the China Information Security Research Institute.

"The meaning of making a safe and controllable IT environment is to better protect national security rather than ousting foreign firms," says Zuo, who co-authored the first security standard in China for the cloud-computing industry.

Gene Cao, a senior analyst at Forrester Research Inc, says that having control over the IT infrastructure does not necessarily exclude overseas vendors from government procurement.

"An example is recent media reports stating Apple Inc CEO Tim Cook's willingness to accept security checks. If Apple's products pass the checks, they will be eligible for government procurements," Cao says.

Contact the writers through gaoyuan@chinadaily.com.cn

(China Daily Africa Weekly 01/30/2015 page20)