Foreign anti-virus vendors set to lose approved status

China has reportedly excluded the United States' Symantec Corp and Russia's Kaspersky Lab from a list of approved anti-virus software vendors in a move that marks the latest attempt to reduce reliance on overseas software providers amid rising awareness of cybersecurity.

With the rapidly increasing innovation capacity of Chinese companies and rising concerns over information security after Edward Snowden's revelations of a National Security Agency spying program, analysts said that high-tech firms in China are heading to a rosy future in the domestic market.

The People's Daily reported on Sunday that the government's procurement agency "has excluded Symantec and Kaspersky" from a list of security software suppliers.

It also reported that the government procurement office had approved the use of five Chinese anti-virus software products from Qihoo 360 Technology Co, Beijing Venustech Inc, CAJinchen, Beijing Jiangmin New Science and Technology Co Ltd and Beijing Rising Information Technology Co Ltd.

Yuliya Yudina, deputy global public relations director of Kaspersky, said in a statement that it is investigating and engaging in conversations with Chinese authorities about this matter. "It is premature to go into any additional details at this time," she said.

Public relations officials with Symantec could not be reached for comment.

One of Symantec's products - data loss prevention software - was added to the latest do-not-use list by the Chinese government last month because of a potential risk of information leakage.

Wang Pei, research manager at IDC China's enterprise system and software research group, said that being excluded from the government's procurement list will significantly hurt Symantec and Kaspersky's business in China, as the government is a major buyer, contributing 23 percent of the total revenue to the Chinese security market.

Wang said that the scrutiny over overseas information technology products is unprecedented.

"With the rising concerns over information security, the government has made it clear it wants to replace overseas products with self-developed ones, which gives domestic firms an opportunity to catch up with those well-developed Western companies," he said.

Wang Jian, an analyst with Analysys International, said that with the rising innovation capacity of Chinese firms, the technology gap between Chinese and foreign anti-virus software companies is shrinking.

"By naming five Chinese brands to the government procurement list, more and more Chinese enterprise users, especially those with close ties with government, are expected to switch to domestic software providers," she said.

When the Beijing-based Qihoo started to offer free anti-virus software to Chinese consumers years ago, many Western software developers pinned their hopes on paid enterprise users.

Symantec was the market leader in China's enterprise-level anti-virus software in 2013. The top five firms had a combined market share of 56.8 percent, and only one of those five companies was Chinese, according to IDC China.

Qihoo enjoys a dominant position in consumer anti-virus software, but since being included on the government procurement list in July 2013, it has seen double-digit growth in enterprise users every month.

"An increasing number of enterprise users have contacted us after reading the government procurement list," said An Yang, an Internet security expert from Qihoo. He said that anti-virus software contributes to about 60 percent of his company's revenue in enterprise security.