Strategy Note /
China

CN : Strategy - Localization remains a key driver for the software industry

    Mark Po
    Mark Po

    Research Analyst

    CGS-CIMB
    26 May 2022
    Published by

    The People’s Daily issued an article reiterating the importance of domestic software development. In line with our previous discussion, local software developers are expected to benefit from the localization trend. This is also in line with Information Technology Application Innovation Plan. We also maintain the view that the Chinese government remains committed to supporting local TMT companies to reduce their reliance on overseas suppliers. The key growing segments, in our view, include: a) operating systems (OSs); b) middleware and database software; c) autonomous driving systems, and d) cyber security. We believe that the local players, including ChinaSoft [0354.HK], Inspur [0596.HK], Kingdee [0268.HK], Kingsoft [3888.HK]/Beijing KingSoft Office [688111.CH], ZTE [0763.HK], DC Holdings [0861.HK], Archermind Technology [300598.CH], ChinaSoft [600536.CH], ZTE [0763.HK], China Greatwall Technology [000066.CH] and Primarius Technologies [688206.CH] can be treated as proxies for software localization.