China’s concerted effort to replace Western tech companies with domestic alternatives, as outlined in the secretive “Document 79,” has been making significant strides since its initiation in 2022. This initiative, shrouded in secrecy and restricted to high-ranking officials, set out to gradually phase out foreign software from China’s IT systems by 2027, with state-owned enterprises mandated to provide regular updates on their progress.
Two years into the implementation of Document 79, the impact is palpable. Major Western tech giants such as Microsoft, HP Enterprise, and Cisco have witnessed a significant decline in their market share within China. For instance, HP Enterprise’s market share plummeted from 14.1% in 2018 to just 4% in 2023, while Cisco’s market share halved over the past five years, dwindling to a mere 8%. Similarly, Microsoft’s Chinese sales now represent a meager 1.5% of its total revenue.
This strategic move by China reflects its ambition to bolster its domestic tech industry while reducing reliance on foreign technologies. By promoting homegrown alternatives, China aims to enhance its technological sovereignty and reduce potential vulnerabilities associated with dependence on Western companies. The success of Document 79 underscores China’s determination to assert control over its tech ecosystem and foster the growth of its domestic tech sector.
The impact of Document 79 on China’s tech landscape is becoming increasingly evident, with government institutions, large corporations, and even popular platforms like WeChat transitioning from Western to domestic technology solutions. This shift extends across various domains, including software, hardware, and data management.
Government agencies in China are now prioritizing domestic technology, even if Western alternatives are deemed superior. This preference is evident in procurement decisions, where Chinese-made solutions are increasingly favored over foreign counterparts. For example, the transition from IBM-powered servers to Chinese-made servers utilizing Huawei chips reflects the broader trend of embracing homegrown technologies.
Platforms like WeChat are also aligning with this trend by migrating their hosting and data management from Western providers like Oracle, IBM, and Microsoft to Chinese companies such as Alibaba and Huawei. This shift not only underscores China’s push for technological self-sufficiency but also signifies the maturation of domestic software solutions, which are now considered viable alternatives to established Western offerings.
The accelerated development of Chinese software, fueled by increased demand from both government and corporate sectors, is notable. Platforms like KylnOS, a domestically developed operating system, are gaining traction and are reportedly comparable to Windows 7 in functionality. This maturation reflects China’s commitment to developing indigenous technologies and reducing reliance on foreign imports.
The dominance of domestic vendors in the Chinese tech market is evident, with China-based companies securing over half of the $6.3 billion market in 2022. This trend continues to strengthen, indicating the growing influence of domestic solutions in China’s tech ecosystem. If Document 79 achieves its objectives, the widespread adoption of domestic technology across governmental entities by 2027 seems increasingly likely.
Discover more from The UBJ - United Business Journal
Subscribe to get the latest posts sent to your email.