China clamps down on US consulting groups

Discussion in 'China' started by amoy, May 26, 2014.

  1. amoy

    amoy Senior Member Senior Member

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    An opportunity for Modi-led India to attract more of multinationals :namaste:

    China clamps down on US consulting groups - FTENG - euro2day.gr

    China has ordered state-owned enterprises to cut ties with US consulting companies such as McKinsey and Boston Consulting Group because of fears they are spying on behalf of the US government, according to people close to senior Chinese leaders.

    The instruction comes days after the US Justice Department indicted five People's Liberation Army officers on charges of cyber-espionage and stealing trade secrets from US corporations including Alcoa, US Steel and Westinghouse.

    Beijing's response to the indictments was swift, with a propaganda campaign in Chinese state media describing the US as a "mincing rascal" and "high-level hooligan". The decision to ban state enterprises from working with western consulting companies marks a further escalation in Beijing's response.

    Management consultancies including McKinsey, BCG, Bain & Company and Strategy&, formerly known as Booz & Co, have extensive operations in China, which remains a rapidly growing market for them.

    "The top leadership has proposed setting up a team of Chinese domestic consultants who are particularly focused on information systems in order to seize back this power from the foreign companies," said a senior policy adviser to the Chinese leadership. "Right now the foreigners use their consulting companies to find out everything they want about our state companies."

    China's leaders announced on Thursday that all foreign IT products and services sold in China would be subject to a new security screening process. Any company, product or service that fails the test will be banned from China.

    The vetting will focus on products and services used in communications, finance, energy and any other industries the government considers related to national security or "public interest", officials said.

    Windows 8, the latest operating system from Microsoft, has already been banned in China because of security concerns, state media reported last week.

    McKinsey, BCG and Strategy& all declined to comment on the consultancy ban but people familiar with their operations said they all still have some Chinese state enterprises among their clients.

    The tabular content relating to this article is not available to view. Apologies in advance for the inconvenience caused.

    Private and multinational companies still make up a significant share of western management consultants' clients in China so a ban on state business would hurt but probably not cripple their operations in the country.

    Likewise, China is unlikely to completely banish US technology companies from the country given how reliant it is on western software.

    "Windows is far too embedded in the Chinese economy for it to be banned completely, but certainly we should expect to see sensitive offices and systems reduce if not eliminate their use of it," said Bill Bishop, an independent consultant based in Beijing. "Under President Xi Jinping, technology and implementation will look to be converging, so foreign tech firms should be very worried about their prospects."

    Despite decades of state-led efforts, China has failed to produce homegrown alternatives to the dominant US technology offerings.

    In February, Red Flag Software, a company backed by the Chinese Academy of Sciences that was the biggest challenger to Windows systems in the country, closed its doors because of poor financial performance.

    In the face of US accusations over cyber attacks and industrial espionage, Chinese officials say their country's ministries, companies, universities and telecoms networks are under constant attack from the "US hacker empire".
     
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  3. W.G.Ewald

    W.G.Ewald Defence Professionals/ DFI member of 2 Defence Professionals

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    That's so funny :)
     
  4. pmaitra

    pmaitra Moderator Moderator

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    Google has already lost a major contract from GoI after the NSA scandal, and rumour mills suggest Cisco might face some heat very soon.
     
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  5. W.G.Ewald

    W.G.Ewald Defence Professionals/ DFI member of 2 Defence Professionals

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  6. amoy

    amoy Senior Member Senior Member

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    China Said to Study IBM Servers for Bank Security Risks - Businessweek

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    Apart from "retaliation" or "security" concerns, it's also commercial protectionism to make room for indigenous players.
     
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  7. nimo_cn

    nimo_cn Senior Member Senior Member

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    why? national security is a serious issue.

    American IT giants have been proved to be spying for NSA, it's high time to get rid of them.

    Sent from my HUAWEI T8951 using Tapatalk 2
     
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  8. W.G.Ewald

    W.G.Ewald Defence Professionals/ DFI member of 2 Defence Professionals

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    Yes but Chinese phraseology I still find amusing.

    By the way, I had dinner in an American Chinese restaurant yesterday. Why do those people always talk among themselves in such a boisterous manner? Honestly, it's sounds like they all are about to kill each other.
     
  9. nimo_cn

    nimo_cn Senior Member Senior Member

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    You think that is funny? Then what the Americans are doing is gonna crack you up!

    America is monitoring the whole through all of its IT companies, at the same time keeps making baseless accusations of China spying on America.

    Dont you feel the irony in that? Or is it that you suddenly lost your sense of humor when it involves America.

    Sent from my HUAWEI T8951 using Tapatalk 2
     

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