For years, U.S. politicians have been calling Chinese telecom-equipment makers Huawei Technologies and ZTE (000063:CH)threats to American security. But making charges about national security is a game that China can play, too. Following Edward Snowden’s disclosures of U.S. spying, the Chinese government seems eager to show American companies that they will pay a price for U.S. government actions.
That’s a lesson that Microsoft (MSFT) and Symantec (SYMC) are learning now. An antivirus company from Silicon Valley, Symantec competes in China against local favorites such as Beijing-based Qihoo 360 Technology (QIHU). According to reports by Bloomberg News and the Chinese media, China has instructed government departments to stop buying antivirus software by Symantec and its Moscow-based rival, Kaspersky Lab. Symantec software has back doors that could allow outside access, according to an order from the Public Security Ministry. Not coincidentally, Qihoo’s New York-traded shares rose 2.7 percent on Monday, following reports of the move against Symantec and Kaspersky.
Symantec is trying to contain the damage. Although the official People’s Daily newspaper reported on Sunday that the government had banned both Symantec and Kapersky, Cupertino (Calif.)-based Symantec says the action is more limited. “It is important to note that this list is only for certain types of procurement and Symantec products are not banned by the Chinese government,” the China Daily reported Symantec commenting in a statement. “We are investigating this report and will continue to bid for and win government projects in China.”
CHINDIA ALERT: You'll be living in their world, very soon 