Foreign security software vendors 'not totally banned'

The United States-based security software maker Symantec Corp and Russia's Kaspersky Lab said on Tuesday that their products are not completely banned by the Chinese government.

The comments followed reports that both companies were excluded from a list of anti-virus software vendors whose products are approved for sale to central government agencies.

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.

Kaspersky Lab confirmed on Tuesday that China had moved to restrict government purchases of software from foreign companies.

"The Chinese Central Government Procurement Center temporarily rescinded its endorsements of all foreign security software providers, leaving only Chinese vendors on the approved list," said the company in a statement on Tuesday.

"However, this restriction only applies to national-level institutions whose funding comes from the central government procurement budget and does not include local governments or large enterprises," said the statement.

Symantec said that its products are not banned by the Chinese government. "The list is only for certain types of procurement. We are investigating this (news) report and will continue to bid for and win government projects in China," said Symantec's statement on Tuesday.

Matthew Cheung, research director of the infrastructure software market division at Gartner Inc, said that Chinese information security companies have a rosy future in the domestic market. However, he said that the government's move will not really mean any direct financial losses for Symantec and Kaspersky in the short term.

He said that only a small proportion of Symantec's and Kaspersky's business in China comes from the government.

"The majority of Kaspersky's business is contributed by consumers rather than enterprise users. And if you look at Symantec, only 20 percent of its revenue comes from the information security business," said Cheung.

According to Symantec's results for the quarter that ended on March 28, revenue from information security products stood at $315 million and the rest of its revenue of $1.625 billion came from other products.

"What's more, government organizations that already have Symantec software are likely to continue to use its products and pay the yearly subscription fees to the company," he said.

Wang Jian, an analyst with Analysys International, said that the companies may only be excluded from the procurement list of national-level institutions, but "the symbolic gesture" by the central government can be very persuasive to lower-level government agencies and State-owned enterprises.