China tech firms gain from cyber barbs, Snowden revelations

Fri May 30, 2014 1:31am EDT
 
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By Kazunori Takada and Matthew Miller

SHANGHAI/BEIJING (Reuters) - Chinese software companies such as Neusoft Corp and China National Software & Service Co Ltd (ChinaSoft) are picking up sales and expanding their marketing as China trades cyber spying accusations with the United States.

For Neusoft, one of China's biggest software solutions providers, that includes selling more networking products and information security software to government and state-owned clients, while introducing higher-value integrated hardware and software packages and consulting services.

"It's understandable for a country to strengthen its information security and cyber security while maintaining its independence and control," Lu Zhaoxia, senior vice president of Neusoft told Reuters. "In the U.S. and Japan, core systems are all domestic."

Based in the northeastern city of Shenyang, Neusoft's clients include some of China's biggest state-owned conglomerates such as State Grid Corp of China [STGRD.UL] and the country's three big telecom operators.

The latest row between Beijing and Washington has brightened the outlook for Chinese software firms, which have already seen improved sales and share prices since U.S. spying revelations a year ago by Edward Snowden, a former U.S. National Security Agency (NSA) contractor. Snowden also claimed the NSA hacked into critical network infrastructure at universities in China and Hong Kong.

Neusoft shares have risen 15 percent to 2-month highs since May 19 when the U.S. Justice Department charged five Chinese military officers, accusing them of hacking American companies to steal trade secrets.

While Lu emphasized Neusoft's commitment to innovation – the firm employs 20,000 workers and over the last 5 years has nearly doubled revenue to 7.5 billion yuan ($1.2 billion), even as profit margins narrowed sharply – the company's stock price has risen around 60 percent since Snowden's revelations last May.

Insigma Technology Co Ltd, Beijing Teamsun Technology Co Ltd and Inspur Software Co Ltd share prices have also spiked higher in the last week, while shares in Shenzhen Kingdom Technology Co Ltd, Yonyou Software Co Ltd and DHC Software Co Ltd have soared 200-300 percent in the past year.   Continued...

 
A receptionist talks on a phone while a picture of former U.S. NSA contractor Edward Snowden is shown on the television screen in the Capsule Hotel "Air Express" at the transit area of Moscow's Sheremetyevo airport in this June 26, 2013 file photo. The latest row between Beijing and Washington has brightened the outlook for Chinese software firms, which have already seen improved sales and share prices since U.S. spying revelations a year ago by Edward Snowden, a former U.S. National Security Agency (NSA) contractor.     REUTERS/Tatyana Makeyeva/Files