The WSJ reports that China is on an extensive push to drive out Western tech companies from the country and replace them with domestic alternatives. China reportedly started its domestic expansion in 2022 with a highly secretive “Document 79,” an initiative focused on deleting Western tech companies from the country. Since then, China’s new plan has been in full effect — domestic alternatives have replaced most Western software providers.
When initiated two years ago, Document 79 was a super sensitive document that only high-ranking officials were purportedly shown. Security was so paramount that copies of the document were not allowed to be made. The initiative set out by Document 79 is to replace foreign software in China’s IT systems by 2027, with state-owned firms required to provide quarterly updates on their progress in replacing foreign software with domestic alternatives.
Two years later, the fruits of Document 79 are now apparent. Microsoft, HP Enterprise, and Cisco’s market share in China has fallen drastically in the past several years. In 2018, HP Enterprise had a 14.1% market share in China, but in 2023, that has fallen to just 4%. Cisco’s market share has halved in the past five years down to just 8%. Microsoft’s Chinese sales today account for just 1.5% of the company’s overall sales.
I agree with everything you said, but I think the word “appropriate” in your second paragraph is using a better term for what they do. They straight up steal our technology. From appropriating the industrial IP used in their country when they manufacture stuff for our companies to actually stealing IP through hacking our companies, they have no qualms about where they get the tech they use. I’m not trying to imply that Chinese companies and people aren’t smart enough to develop the tech we have, but it makes good business sense to spend zero money on R&D if there are no laws stopping you from copying tech from someone who has spent that money on R&D.