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Hikvision in PC business while Microsoft, Dell, HP are banned from state-owned agencies - YouTube
Channel: Lei's Real Talk
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Doing business in China will be more difficult聽
for American and other foreign high-tech firms.聽聽
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China is quietly implementing a multi-year plan聽
to replace foreign technologies with domestic聽聽
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products vetted by a government-controlled work聽
committee. Government entities, state agencies,聽聽
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and the military are given priority聽
to replace their foreign or jointly聽聽
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developed high-tech products ranging from PCs,聽
to software, to cloud and network equipment.
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Hello everyone. I鈥檒l Lei. Welcome to my show.
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Right around the time Apple announced in March,聽
that it would stop selling its products in Russia,聽聽
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news about Chinese authorities聽
ordering enterprises and institutions聽聽
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to switch to domestic computers continued聽
to appear on Chinese social media platforms.聽聽
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Some people talked about their workplace computers聽
suddenly being switched to domestic brands.聽聽
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Others complained that the new聽
computers were not compatible聽聽
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with the original printers and scanners.
On May 4, a mainland Chinese social media user聽聽
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complained that after his workplace required聽
everyone to turn in their old computers聽聽
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for Chinese-made ones, they had to install a聽
Windows emulator because the new computers weren't聽聽
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compatible with Windows. The person claimed聽
that the new computers reduced office efficiency聽聽
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to the level of 10 years ago,聽
and his boss was unhappy.
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Experts believe China is implementing聽
its six-year-old "Safe and Secure Tech聽聽
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Industry" initiative to purge foreign technology聽
products and replace them with domestic products.聽聽
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It's part of a broader effort by Beijing聽
to be independent of foreign suppliers聽聽
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so as to exert control over its聽
high-tech industry and data security.
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Formed in 2016, the IT Application Innovation聽
Working Committee is responsible for ensuring that聽聽
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central government agencies, provincial聽
and large municipal governments,聽聽
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state-owned enterprises, and the military do not聽
expose themselves to network and data security聽聽
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risks by relying on foreign technologies.聽
They are required to replace foreign IT聽聽
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equipment and software with Chinese-made聽
CPUs, operating systems, and databases.聽聽
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The Committee invites trusted IT suppliers vetted聽
under the program to be on a supplier list.聽聽
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Wholly-owned foreign ventures聽
or joint-ventures don't qualify.聽聽
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Bloomberg reported last year that the Committee聽
had maintained a list of over 1,000 suppliers. The聽聽
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Ministry of Industry and Information Technology聽
and the China Electronics Standardization聽聽
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Association oversee the Committee.
According to Chinese media, the initiative聽聽
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was the response to the 2013 Edward Snowden聽
leak of the NSA surveillance program.聽聽
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Chinese authorities felt a sense of urgency to聽
remove foreign components from its IT networks to聽聽
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help the regime achieve "control and independence聽
through localization." Beijing worries that聽聽
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"network vulnerabilities and code backdoors can聽
be used as a weapon between rival countries."
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13 million people work in government agencies聽
and 26 million more in state institutions.聽聽
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So it's expected that the number of computers聽
needing to be replaced is at least 40 million.聽聽
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Assuming a combined hardware and software cost聽
of 13,000 RMB per computer, the total cost of聽聽
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swapping personal computers will be half a聽
trillion RMB or about 63 billion dollars.
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I believe the 40 million PCs is underestimated聽
because the number of CCP officials聽聽
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alone is about 70 million. This doesn't include聽
the people working at state-owned enterprises, and聽聽
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the computers in the military. Servers, network聽
equipment and system software are additional.聽聽
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Bloomberg estimated that the initiative would聽
cost Beijing $125 billion or one trillion RMB.聽聽
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I think the actual amount may be more.
Bloomberg's report called the Committee and聽聽
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its work secretive. We don't know the progress of聽
the project or its impact on foreign companies,聽聽
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such as Dell, HP, Microsoft, yet. Chinese聽
social media posts have disclosed that the聽聽
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central government requires nationwide equipment聽
replacement to be complete within two years.
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One user from western Henan province聽
claimed that their city has already replaced聽聽
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all computers with new ones by Hikvision.
Two years ago, in March 2020, when Chinese聽聽
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surveillance equipment manufacturer Hikvision聽
announced that it would get into the PC聽聽
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business, many people were surprised.
Hikvision has come under international聽聽
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criticism following revelations that it聽
helped build surveillance camps in Xinjiang.聽聽
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Cyber security research firm IPVM revealed that聽
Hikvision has long had close ties with the Chinese聽聽
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military. This week, news came out that the United聽
States is considering imposing new sanctions by聽聽
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prohibiting American companies and citizens from聽
conducting commercial activities with Hikvision聽聽
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and freezing its assets in the United States. In聽
hindsight, Hikvision has been preparing for U.S.聽聽
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sanctions, and by going into the PC聽
business, it can take advantage of the聽聽
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massive business opportunity the "Safe and聽
Secure Tech Industry" initiative offers.
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The CCP has always regarded technical competitions聽
as a national priority. Its very first project聽聽
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to remain technically independent started聽
in the 1980s after President Ronald Regan聽聽
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introduced the Strategic Defense Initiatives or聽
the Star Wars program in 1983. On March 3, 1986,聽聽
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four leading Chinese scientists wrote a letter聽
to Deng Xiaoping, proposing a state-sponsored聽聽
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high-tech R&D program to help China remain聽
competitive and independent of foreign聽聽
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technology. Deng approved the idea within two聽
days and earmarked 10 billion RMB, which was 5%聽聽
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of China's national budget at the time, for聽
the initiative. The project focused on biotech,聽聽
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aerospace, IT, laser, automation, energy, and聽
new materials and was given the code name: 863
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The major scientific achievements of the 863聽
Project include the Shenzhou spacecraft, the Jiao聽聽
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Long submersible, the Tianhe supercomputers,聽
and the Loongson microprocessors.
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Twenty years after the 863 project, the regime聽
realized that for it to be independent of聽聽
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foreign technology, it needed to develop聽
its own operating systems and microchips.聽聽
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In November 2009, the Ministry of Industry聽
announced a national high-tech initiative to聽聽
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focus on developing three IT areas: core聽
electronic components, high-end chips,聽聽
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and systems software. Beijing set the goal of聽
developing Chinese-owned operating systems,聽聽
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database management systems, middleware,聽
office software, and microchips. Within a year,聽聽
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by December 2010, Beijing approved 19聽
billion RMB for the project, of which聽聽
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the central government-funded 8.4 billion, and聽
11 billion came from the local governments.
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In 2014, China vigorously pushed for chip聽
independence by announcing the 139 billion RMB聽聽
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national semiconductor fund and renewed the聽
initiative with another 204 billion in 2019.聽聽
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China also pushed for software development as聽
a major initiative in its 14th 5-year plan,聽聽
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released last year.
While writing this script, I thought about聽聽
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the words computer and cell phone in Chinese.聽
Whoever came up with them had great foresight.聽聽
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Computer in Chinese is Dian Nao, meaning "electric聽
brain." And cell phone is Shou Ji. It literally聽聽
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means "hand machine." These words were translated聽
decades ago when these technologies first appeared聽聽
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in their primitive form. Who would have thought聽
that their Chinese names so accurately foretold聽聽
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the roles that these devices would play in our聽
lives someday, and how dependent we would become聽聽
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on electric brains and hand machines? What聽
would we do without Dian Nao and Shou Ji?
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That's all for today. BTW, I want to thank聽
everyone for doing the community polls.聽聽
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I鈥檓 actually quite surprised by the聽
results. Thank you. See you soon.
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