February 24, 2024

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China Builds Self-Reliant Domestic IT Infrastructure Ecosystem

A report titled “China Tech Decoupled” examined how China is building up a self-reliant domestic IT infrastructure ecosystem with detailed analysis. How China’s tech sector evolves and potentially decouples from the global tech system is one of the most important factors shaping the future. The report sheds light on how China’s effort to build up key domestic substitute IT infrastructure is going and how it will impact the world’s tech landscape.

China realised that it depended heavily on foreign technology, particularly in a critical industry: semiconductors. Since then, a renewed national campaign to build up China’s self-reliant supply chains picked up pace significantly. A new industry suddenly became the centre of the spotlight for governments and private businesses. Referred to as Xin Chuang, or Information Technology Application Innovation Industry, this industry aims to build up a comprehensive, self-reliant Chinese domestic information technology industry from chips, operating systems, and applications.

Xin Chuang industry, which is expected to exceed US$ 52 billion in scale in 2023, while the overall market capacity will exceed RMB1 trillion Yuan (US$ 155 billion). The Xin Chuang industry consists of four parts: basic hardware, basic software, application software, and information security. Chips, computing devices, operating systems, databases, and middleware are some of the most important components of the sector.

In many other information technology segments, including servers, enterprise applications, public cloud, and big data platforms, the Chinese market is expected to experience rapid growth going forward. Beijing’s objective is to have Chinese companies grab a significant portion of this future growth and obtain significant domestic market share.

After years of development, leaders in each segment of the Xin Chuang industry have emerged. From operating systems, CPU platforms, databases, cyber security to applications, a wide range of Chinese companies offer domestic replacement options for foreign products in each market segment.

Despite strong policy support and China’s market scale advantage, there are several challenges in China’s efforts to beef up its Xin Chuang market. In semiconductors, for example, government support led to a boom in the industry. In 2020 alone, over 20,000 new semiconductor companies were established in China. There were 73,000 semiconductor companies operating in the country as of the end of 2020. This could lead to vast waste of resources, as previously happened in other sectors such as China’s solar panel market. Around 30% of China’s semiconductor companies were established within a year, and approximately 18.4% of them did not survive beyond one year.

Moreover, China currently does not have a comprehensive plan designed specifically to break the bottleneck areas. Chinese companies also lag global market leaders by two generations or more in manufacturing nodes in semiconductor manufacturing. Such a gap will take decades to close. Xin Chuang products also need to improve quality and build up relevant ecosystems. Regional fragmentation and lack of coordination also present another challenge. Currently, there are many small and regional competitors in the Xin Chuang industry, creating adaptability and interoperability issues.

Despite these challenges, China is likely to make reasonable progress in domestic replacement in the next decade in markets such as Internet-of-Things (IoT) O.S., cyber security, cloud computing, computing devices, and servers. These markets do not have as high technological barriers or long R&D cycles as chip manufacturing. As a greater share of these markets is captured by domestic companies, foreign companies will gradually lose market share and influence over the Chinese market.

As reported by OpenGov Asia, China has dedicated growing resources to basic research and original innovation in recent years. Their efforts aim to cultivate a driving force for economic growth and improve people’s living standards. Chinese researchers, hi-tech enterprises and local governments are together actively striving to strengthen original innovation.

PARTNER

Qlik’s vision is a data-literate world, where everyone can use data and analytics to improve decision-making and solve their most challenging problems. A private company, Qlik offers real-time data integration and analytics solutions, powered by Qlik Cloud, to close the gaps between data, insights and action. By transforming data into Active Intelligence, businesses can drive better decisions, improve revenue and profitability, and optimize customer relationships. Qlik serves more than 38,000 active customers in over 100 countries.

PARTNER

CTC Global Singapore, a premier end-to-end IT solutions provider, is a fully owned subsidiary of ITOCHU Techno-Solutions Corporation (CTC) and ITOCHU Corporation.

Since 1972, CTC has established itself as one of the country’s top IT solutions providers. With 50 years of experience, headed by an experienced management team and staffed by over 200 qualified IT professionals, we support organizations with integrated IT solutions expertise in Autonomous IT, Cyber Security, Digital Transformation, Enterprise Cloud Infrastructure, Workplace Modernization and Professional Services.

Well-known for our strengths in system integration and consultation, CTC Global proves to be the preferred IT outsourcing destination for organizations all over Singapore today.

PARTNER

Planview has one mission: to build the future of connected work. Our solutions enable organizations to connect the business from ideas to impact, empowering companies to accelerate the achievement of what matters most. Planview’s full spectrum of Portfolio Management and Work Management solutions creates an organizational focus on the strategic outcomes that matter and empowers teams to deliver their best work, no matter how they work. The comprehensive Planview platform and enterprise success model enables customers to deliver innovative, competitive products, services, and customer experiences. Headquartered in Austin, Texas, with locations around the world, Planview has more than 1,300 employees supporting 4,500 customers and 2.6 million users worldwide. For more information, visit www.planview.com.

SUPPORTING ORGANISATION

SIRIM is a premier industrial research and technology organisation in Malaysia, wholly-owned by the Minister​ of Finance Incorporated. With over forty years of experience and expertise, SIRIM is mandated as the machinery for research and technology development, and the national champion of quality. SIRIM has always played a major role in the development of the country’s private sector. By tapping into our expertise and knowledge base, we focus on developing new technologies and improvements in the manufacturing, technology and services sectors. We nurture Small Medium Enterprises (SME) growth with solutions for technology penetration and upgrading, making it an ideal technology partner for SMEs.

PARTNER

HashiCorp provides infrastructure automation software for multi-cloud environments, enabling enterprises to unlock a common cloud operating model to provision, secure, connect, and run any application on any infrastructure. HashiCorp tools allow organizations to deliver applications faster by helping enterprises transition from manual processes and ITIL practices to self-service automation and DevOps practices. 

PARTNER

IBM is a leading global hybrid cloud and AI, and business services provider. We help clients in more than 175 countries capitalize on insights from their data, streamline business processes, reduce costs and gain the competitive edge in their industries. Nearly 3,000 government and corporate entities in critical infrastructure areas such as financial services, telecommunications and healthcare rely on IBM’s hybrid cloud platform and Red Hat OpenShift to affect their digital transformations quickly, efficiently and securely. IBM’s breakthrough innovations in AI, quantum computing, industry-specific cloud solutions and business services deliver open and flexible options to our clients. All of this is backed by IBM’s legendary commitment to trust, transparency, responsibility, inclusivity and service.

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