The ‘De-IOE’ in China

China has recently launched its so-called ‘De-IOE’ programme, a programme aimed at reducing dependence on US-developed softwares and service companies and enabling businesses to use Chinese-developed alternatives. The ‘De-IOE’ campaign is China’s attempt to decrease dependence on US softwares and service firms, chiefly IBM, Oracle and EMC, by providing incentives to state enterprises to use alternatives softwares and service companies.


The idea of ‘De-IOE’ actually comes from Alibaba, the first Chinese company to start using alternatives to US-developed softwares. Recently, Alibaba Cloud, a global cloud computing company of China, launched its new generation database, POLARDB. Before this, Alibaba has already made some “milestones”: in 2013, it stopped using the IBM server entirely; in 2015, it changed the database system from Oracle to a domestic grown one. As an e-commerce company, Alibaba is at the forefront of such changes. However, in traditional industries in China, such as finance, telecommunications and securities, ‘IOE’ is still widely used by companies.

E-commerce companies such as Alibaba have many professionals working on developing their technology. As a result, they are able to solve their problems by themselves and use technology to develop their business. They are incentivized to partake in the ‘De-IOE’ trend as using ‘IOE’ has many disadvantages for them. As their costumer base can rapidly increase, e-commerce companies such as Alibaba need to have strong-performing background frameworks so that they can be used even by a lage number of costumers. Yet using ‘IOE’ means not only high software and services usage costs but also a certain degree of inflexibility in frameworks, as ‘IOE’ does nto allow for the needed near-unlimited extension and quickly-developing Internet technology. Since Alibaba’s success with ‘De-IOE’, more companies in China are trying to follow. There are some Chinese firms that provide products similar to ‘IOE’. Large banks, telecoms operators and state enterprises for instance started to use X86 server instead of minicomputer (IBM) in some non-core departments.

However, these large banks, telecom operators and state enterprises still use ‘IOE’ in their core departments. Of course, these enterprises are not e-commerce companies. Not all the companies have enough funds and time to complete the switching procedures. For large banks, ‘De-IOE’ means that all of the software must be modified and made compatible with domestic server systems, which often seems an impossible feat. The costs of replacement can be astronomical as well. Moreover, the way IOE and non-IOE systems operate is fundamentally different, and thus ‘De-IOE’ would lead to transforming all the data to the new system. Lastly, there is still much scope for development for domestic products, which are not yet as well developed as IOE.

Overall, China is determined to follow the ‘De-IOE’ programme in order to reduce dependence on foreign IT manufactures and improve domestic industries. But those foreign IT companies have developed for many years. So if those domestic firms of China want to be powerful as those foreign ones, they should make even more efforts to catch up. The IT security industry of China expects positive developments in this area in the coming years. But only time can tell whether they will live up to these expectations.