Foreign high-tech vendors may face stricter controls

A China UnionPay stand at a network security promotion week in Beijing shows the vulnerability of magnetic stripe bank cards and promotes the use of cards with chips. [Photo/China Daily]

Tighter controls on information technology products used in the financial sector may pose more hurdles for overseas companies in China, industry sources said on Monday.

Overseas companies like IBM Corp and EMC Corp will need to fully comply with the regulations if they want to win deals in the country, said the sources.

According to a report published in the Shanghai-based newspaper China Business News, the China Banking Regulatory Commission, the nation's banking regulator, is conducting a full-scale research across Chinese banks and large financial institutions to gauge the information security conditions. The research involves IT hardware, software and services, it said.

The government has indicated that it or other suitable organizations should have control over the technology used in financial organizations. According to a document released by the CBRC last year, China plans to have at least 75 percent of the IT products used in the financial sector under its control.

A source close to the commission said the regulator would also check the actual use of domestic software by lenders while assessing the safety of banks' information networks.

Several top Chinese lenders, including Bank of China Ltd, did not reply to China Daily's requests for comment.

IBM, EMC, Microsoft Corp and Hewlett-Packard Co are among the biggest overseas IT providers in China. A number of the products, including Microsoft's Windows 8.1 operating system, have been banned from government procurement projects because of security concerns.

Chinese vendors, by contrast, are making aggressive moves by trying to fill the void left by the foreign brands.

ZTE Corp, the communications equipment provider, and Inspur Group Ltd, a maker of servers, have announced "breakthroughs" in self-developed IT products that can be used in critical industries including banking.

The only way for overseas IT companies to win government procurement deals is to fully cooperate with the government and disclose core operating data to regulators, said Zuo Xiaodong, vice-president of the China Information Security Research Institute.

"The meaning of making a safe and controllable IT environment is to better protect national security rather than ousting foreign firms," said Zuo, who co-authored the first security standard for cloud-computing industry.

Gene Cao, a senior analyst at Forrester Research Inc, said that being controllable does not necessarily exclude overseas vendors from government procurement.

"An example is recent media reports stating Apple Inc CEO Tim Cook's willingness to accept security checks. If Apple's products pass the checks, they will be eligible for government procurements," Cao said.

IBM denies reports of huge job cuts

IBM Corp on Monday denied media reports that it will cut 110,000 jobs, saying the layoff only involves several thousands employees.

In a response to a Forbes report that IBM would downsize staff by 26 percent, the company refuted it as "groundless" and said it will invest $600 million on corporate restructuring, with the number of employees involved being several thousands.

After a disappointing third-quarter earnings report, the company said it decided to initiate job cuts in some areas, even as it created more than 10,000 new jobs across the world.

Most of the jobs are in cloud computing, data mining, cybersecurity and mobile technology where IBM is seeing quick growth, the company said.

It remains unclear how the layoff will affect the company's China operations. The company is yet to disclose detailed plans of the job cuts.

Robert LeBlanc, senior vice-president of IBM, said this week the company is planning to recruit 1,000 cloud-computing experts.

The latest round of job losses comes as the company grapples with declining revenues. Data show its third-quarter revenues plummeted to $24 billion, down 11.9 percent from a year earlier.