Table of Contents
CHINA’S 3-5-2 PLAN
- Beijing officials have ordered all government offices and public institutions to replace foreign hardware and software with Chinese alternatives within the next three years.
- In 2020, the first year when the directive enters into effect, government organizations are supposed to replace 30% of their foreign hardware and software in their respective inventories.
- For 2021, the target is 50%, and then 20% in 2022.
UNDERSTANDING THE MOVE
- The trade war is getting worse with both China and U.S not budging.
- In order to prepare for further escalation China wants to remove all foreign equipment within a span of 3 years
POINTS TO NOTE
- Analysts at Jefferies say that US technology companies generate as much as $150bn a year in revenues from China.
- HP, Dell and Microsoft
- (150 billion dollars by selling equipment to both government and private entities. )
POINTS TO NOTE
- Replacing all the devices and software in this timeframe will be challenging, given that many products were developed for US operating systems such as Windows.
- Chinese government offices tend to use desktop computers from the Chinese-owned company Lenovo, but components of the computers, including processor chips and hard drives, are made by American companies.
ANOTHER REASON FOR THE MOVE
- Work to replace an estimated 20-30 million pieces of hardware will commence in 2020
- This will boost China’s manufacturing industry as China’s exports are going down
THE BEGINNING OF MADE IN CHINA 2025
- With it, China aims to move away from being the “world’s factory” (producing cheap, low-quality goods due to lower labour costs) and move to producing higher-value products and services.
LESSONS FOR INDIA
- India must push its manufacturing sector otherwise another wave of cheaper Chinese hardware and software will take over the Indian market.
- Already Indians have started using Chinese social media apps and software
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