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Business climate grows hostile between China, U.S.

Posted: 30 Jun 2014 ?? ?Print Version ?Bookmark and Share

Keywords:cyber espionage? China? U.S.?

Cyber espionage is one of the greatest threats on the Internet, especially in the electronics industry where system infiltration could lead to millions, even billions worth of losses for firms.

Entering a new era of mistrust, U.S. and China have locked horns in an escalating conflict over cyber espionage. The impact now threatens supply chain planning at U.S. companies seeking to sell hardware, software, and maintenance and support services into China.

The latest episode in this ongoing narrative comes from a Bloomberg News report that the Chinese government is considering replacing the IBM servers that run China's banking industry with Chinese-made technology. Chinese authorities say such a move would help them protect their financial data. If this report (which relied on four unnamed sources) is true, high-tech supply chain managers must recognise and prepare for slower sales into China.

Additionally, a new level of competition is about to take place as Chinese technology becomes more sophisticated and capable of managing business processes in sensitive markets that have a huge amount of daily transactions.

Business climate between China and U.S. tech firms

In the new climate of mistrust and suspicion, and with emerging developments in Chinese technology, the Chinese will be tempted to use their own developments to secure their sensitive data.

Now that China has made significant strides in developing comparable technology to match IBM servers and mainframe systems such as IBM's System z, which is designed to process large amounts of informationthe threat of revenue loss for U.S. companies becomes more imminent.

That's the case being made by Kuba Stolarski, IDC's research manager for servers, virtualisation, and workloads. "China does have a track record now of developing its own processors, including an Itanium-compatible chip, a system-on-a-chip, as well as a SPARC-compatible chip that was used in the Milky-Way 2 supercomputer," Stolarski told EBN. "If China has developed its own alternative that is compatible with System z architecture, then they could be trying to migrate away from IBM."

After more than 30 years of providing China's banking sector with high-end servers and other technology, IBM is holding out hope that the quality of its products and the strength of its business relationships will shield it from any decision that tempts its clients to look elsewhere for replacement technology.

Whereas IBM worries about losing its grip on the Chinese market, Cisco Systems recently said that its business in China declined eight per cent in the quarter that ended April 26. Additionally, the Chinese government recently decided not to use Microsoft Corporation's Windows 8 operating system for its computers.

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