Wednesday, June 4, 2014

China's SOEs will struggle to cut ties to US consultants

China has ordered state-owned enterprises to cut ties with US-based consulting companies, including McKinsey and the Boston Consulting Group on fears that they are spying on behalf of the US government, the Financial Times reports, citing a source close to senior Chinese leaders.

A source close to an adviser to China's State Council or cabinet that the rumor was a leader's oral instruction and had not been made official, according to Shanghai's China Business News. So far, representatives from several foreign consulting companies have responded that they have not received such notices and that their companies are operating normally.

Some analysts are seeing this as China's protest against the US Justice Department's indictment of five People's Liberation Army officers on charges of cyber espionage.

An unnamed source from the industry pointed out that foreign consulting companies had provided professional knowledge to Chinese enterprises and helped them become more internationalized. The role of these companies has been indispensable, the source added.

Banning China's state-owned enterprises from working with foreign consulting companies is part of Beijing's moves aimed at tightening safety of information, in response to the Edward Snowden incident, in which the former US government contractor made public numerous documents related to covert surveillance conducted by the United States.

There are also rumors that Chinese authorities have recently forbidden the use of the Windows 8 operating system on computers used by government agencies and that Beijing is calling for local banks to choose locally developed service providers over IBM's high-end service products.

None of these measures have been concretely verified, China Business News said.

read more: http://www.wantchinatimes.com/news-subclass-cnt.aspx?id=20140604000003&cid=1102

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