Chinese Protest American Products

The municipal governments of Beijing and Tianjin recently signed multi-million dollar agreements allowing licensed use of Microsoft software products. In addition, this past week the Beijing government also contracted with Dell Computer to supply 16,000 personal computers for primary and secondary schools. These sales are good news for U.S. suppliers but they have produced a loud protest from the nascent Chinese information technology industry.

A government procurement law became effective in 2003 and it imposes general guidance for buying Chinese products when possible. Unfortunately, its provisions are considered sketchy, nonspecific, and open to interpretation. Therefore, the municipalities do not believe they are in violation of the law. Chinese software businessmen disagree.

IT industry insiders see the deals with Microsoft and Dell as undercutting growth and sustainability of Chinese software businesses which rely on government contracts. There is also considerable apprehension about the near future since no fewer than 20 other cities are expected to be making software purchases.

The central Chinese government is sure to hear more frequent and louder calls from the software industry to "Buy Chinese."