CxC Connectivity by Convergia
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In a bold move, China is charting its path to technological autonomy with a strategy known as “Erasing EU,” aimed at reducing its dependence on U.S. technology. Document 79, a secret plan unveiled in 2022, marks the beginning of this ambitious effort, triggered by increasing chip export restrictions and sanctions imposed by the U.S. on Chinese technology companies.

Document 79 was kept at such a high level of confidentiality that only high-ranking officials and executives were disclosed the order, without allowing them access to printed documentation, according to sources close to the matter.

Issued in September 2022, this document emerged in a context in which the United States was intensifying chip export restrictions and sanctions on Chinese technology companies. The purpose of this plan is for parastatal companies, especially in critical sectors such as finance and energy, to replace foreign software, particularly U.S. software, in their computer systems by 2027.


For many years, large U.S. technology corporations thrived in China, facilitating rapid industrial growth through computers, operating systems, computer networks and software.

However, Chinese leaders are determined to break this dependence, driven by the goal of achieving technological self-sufficiency and long-term concerns about the country’s IT security.

The main targets were U.S. hardware companies, with Dell, IBM and Cisco seeing a large part of their equipment progressively replaced by products from Chinese competitors.

At the same time, giant vendors such as Microsoft and Oracle are experiencing a loss of ground in this area, which has been one of the last bastions of profitability for foreign technology in the country.

State-controlled companies have increased their purchases of domestic brands, even if the replacement Chinese products do not meet the desired quality standards. This shift in purchasing preference is evident among financial institutions such as banks and brokerages, as well as utilities.

This push toward local technology adoption is known as Xinchuang, which translates as IT innovation and emphasizes the security and reliability of domestic technology.

What is the magnitude of the decline in technology procurement in China?

As China focused on replacing technology hardware, IBM’s profits in the country have experienced a steady decline. In 2021, more than 20 years after its establishment, IBM scaled back its research operations in Beijing.

Cisco, once a leading technology force in China, revealed in 2019 that it was losing orders in the country to local suppliers due to a trend toward nationalistic purchasing. On the other hand, the market share of Dell, a U.S. maker of personal computers, has fallen by nearly half over the past five years in China.

Hewlett Packard Enterprise (HPE), which specializes in server, storage and networking manufacturing, derived 14.1 percent of its revenue from China in 2018, according to estimates from database provider FactSet. However, by 2023, this figure had dropped to 4 percent. In addition, in May of the previous year, HPE announced that it was considering the sale of its 49 percent stake in its Chinese joint venture.

On the software side, companies such as Adobe, Cloud Software Group (parent company of Citrix) and Salesforce have opted to withdraw or scale back their direct operations in China in the past two years.

Microsoft, the world’s largest software vendor, has had significant dominance in computer operating systems in China. In China, a Morgan Stanley survey of 135 information technology managers revealed that they anticipated a decline in computers running the Windows operating system over the next three years.

Transition to on-premise companies

The adoption of cloud services for data storage and management instead of using local servers has enabled Chinese companies to close the technology gap. In the database software market in China, Oracle, IBM and Microsoft were undisputed leaders as of 2010. However, since then, Chinese companies such as Alibaba and Huawei have developed their own database management solutions to replace U.S. technologies.

Despite these advances, the technological confrontation between China and the United States is far from over and promises to continue to evolve in the future.

David Monarque Saenz

Director of Commercial Channels LATAM

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Author: yoordin-fr