14 DAY TRIAL // China isn't really the friendliest market for Microsoft, but the software giant has been struggling to comply with all demands the Beijing government had until now, including teaming up with local companies to continue offer its products to Chinese buyers.
But a Microsoft executive is now warning that the always-changing Chinese tech policies could hurt its business and slow down the growth of some products, including cloud platform Azure.
Microsoft Azure is being used by several large companies that are doing business in China and currently has approximately 50,000 customers, but a new set of restrictions could affect local sales, Gary Sun, president of Microsoft's Asia-Pacific Technology subsidiary, explained.
China can change its mind at any time
Sun explained that China is a very uncertain market for all tech companies that are trying to sell their products in the country because the Beijing government can introduce new restrictions at any time without giving them any other option.
This tie, it's believed that China is looking for stricter regulations that would require foreign companies to provide encryption keys for the software solutions they sell locally, and Microsoft says that Azure is very likely to be impacted by this change.
Sun explained that teaming up with Chinese companies already has a negative impact on local sales, but the governments wants all data to be stored on local servers and not in data centers based overseas. For Azure, Microsoft joined forces with 21Vianet.
Gary Sun explained that despite all of this, Microsoft is very confident that it can continue working with the Chinese government and expand its business in the country.
"We believe that with what we are doing, we can build trust with the government. And in return, that will help us in the long-run,” he explained.
China is a very difficult market for Microsoft, as the local government banned Windows 8 on state computers last year and started an anti-trust investigation against the company. Instead of Windows 8, Microsoft has been offering Windows 7 to the government ever since, but several local officials claimed that Redmond's operating system comes with backdoors that allows US agencies to spy on their PCs and steal state secrets.
Microsoft, on the other hand, is trying to comply with all these requirements and continue selling products in China, but with growing competition from local companies, which are clearly backed by the Beijing government, it becomes harder to benefit from its momentum on the long term.