For American tech companies in China, the writing is reportedly on the wall or as an exclusive report in Wall Street Journal (WSJ) said, “its also on paper, in Document 79.” For those wondering what this Document 79 is, it is a directive issued by the
Chinese government
that some refer to as “Delete A,” for
Delete America
.
Document 79 is said to be so sensitive that high-ranking officials and executives were only shown the order and weren’t allowed to make copies.
The document reportedly requires state-owned companies in finance, energy and other sectors to replace foreign software in their IT systems by 2027.
Over the years, American tech giants had long thrived in China as they “hot-wired the country’s meteoric industrial rise with computers, operating systems and software.” Chinese leaders now want to change that for a “push for self-sufficiency and concerns over the country’s long-term security.”
The first targets
The first targets have been the US hardware makers: Dell, IBM, HP and Cisco Systems. All these companies have gradually seen much of their equipment replaced by products from Chinese competitors. And as China focused on replacing its hardware, the China revenues of these companies have steadily declined.
The likes of Microsoft and Oracle too are said to be losing ground in the field. The effort is just one salvo in a yearslong push by Chinese leader
Xi Jinping
for self-sufficiency in everything from critical technology such as semiconductors and fighter jets to the production of grain and oilseeds. The broader strategy is to make China less dependent on the West for food, raw materials and energy, and instead focus on domestic supply chains.
The rise of economic nationalism
The report said that some six years ago, most government tenders sought hardware, chips and software from Western brands. “By 2023, many were seeking Chinese tech products instead.”
Looking forward, the report quoting analysts said that the preferential demand from China’s state sector could mean Western ones keep slipping further behind in the Chinese market. However, all’s not lost as the report said: “There continue to be pockets of opportunity in China for Western companies, especially in more advanced tech where China still lags behind and in sales to multinational companies operating there.”