China: Apple products pose security concerns

The Chinese government has said no public money can be used to purchase Apple iPads and MacBooks due to security concerns, according to Bloomberg, citing "officials familiar with the matter." 

That report said 10 Apple products – which include the Macbook Air, MacBook Pro, iPad, and iPad Mini – were excluded from the final government procurement list that was distributed in July. Those products were, however, included on a June version of the list, according to the report. 

Last week, the Chinese government published a software procurement list that did not include foreign anti-virus vendors, such as Kaspersky Lab and Symantec Corp., which had previously sold software to Chinese agencies, according to Reuters. 

And when the Chinese government decides to stop the procurement of certain products, "it sends a signal to corporates and semi-government bodies,” Mark Po, an analyst with UOB Kay Hian Ltd. in Hong Kong, told Bloomberg. "The Chinese government wants to make sure that overseas companies shouldn’t have too much influence in China."

This could be viewed as another setback for the Apple iPad, which saw a decline in its third-quarter sales from the same time last year. In what was seen by many as a move to boost iPad sales, Apple announced a partnership with IBM that would market Apple products, such as the iPad, directly to business clients. However, being spurned by the Chinese government could pose difficulties for this burgeoning partnership given that enterprise clients in China can be swayed by the government. 

"The large businesses in China tend to buy where the government leads," Frank Gillett, an analyst at Forrester Research, told Bloomberg. "There’s a point of national pride here. I would expect that pattern to continue."

This episode marks yet another example of bouts faced by US technology companies in China, a market that has grown increasingly suspicious of US technology companies since revelations of the US government's electronic spying operations were revealed last year by Edward Snowden.

"US companies including Apple, Microsoft, Google, Facebook, etc. are all coordinating with the PRISM program to monitor China," official Chinese media reported in June. 

Last month, it was reported that Chinese hackers had broken into US government computer networks containing personal information on federal employees. Subsequently, Apple faced off with China in a war of words after Chinese media accused a feature on the Apple iPhone of posing a security threat. Apple refuted these allegations and Chinese media seemed to retract their initial statements.  

More recently, China began an antitrust investigation against Microsoft, which was sparked when four Microsoft offices were visited by Chinese investigators from the State Administration for Industry and Commerce. 

In addition, the Chinese tech market is increasingly turning to local vendors at the expense of foreign ones. A recent article published by China's state-run Xinhua News Agency urged Chinese Internet companies to place greater emphasis on competing abroad. That article further noted that the market for Internet services is dominated by American companies, which it said have been compromised by US spying efforts. 

-Material from Reuters was used in this report.