smartphone_china

China is poised to become the world’s most important smartphone market.

Pando reported in May that more devices will be sold in China than in the United States this year. And, despite the low-cost devices offered to Chinese consumers, revenues will also be higher than in the US. But now it seems that the market’s wings will be clipped, at least to Western manufacturers, right when it’s starting to take flight.

The Chinese government is working to improve its desktop and mobile operating systems to reduce its country’s dependence on Western companies, according to a Reuters report stating that the government hopes to replace foreign operating systems in the next three to five years. (It plans to replace desktop platforms soon, but expects smartphone platforms to take longer.)

It’s not hard to guess why the Chinese government might encourage its citizens to ditch other operating systems in favor of its own platforms. Besides the desire to control everything people do in its section of the Internet, it probably wants to make sure that it’s not being spied on by the National Security Agency, which is said to have direct access to many software platforms.

China isn’t the only country worried about that. As I wrote when the German government allowed a long-term contract with Verizon to expire after its compliance with the NSA was revealed as part of the continued coverage of the agency based on Edward Snowden’s leaks:

Many observers have feared this might happen since the NSA programs were revealed last June. Tech executives warned Obama that their businesses might suffer because of the programs and their inability to discuss them. Their companies are finding it more difficult to pitch their products to people in other countries while analysts believe that the “dream is over” and that “the era of US tech dominance in everything from servers to routers to the cloud is facing a crisis of confidence.” Countries like Brazil are threatening to just create their own Internet.

Carmel DeAmicis warned in her report on China’s increasing importance to manufacturers that it wasn’t time to dismiss the United States’ own value to those same companies. Back then it was because profit margins are often higher in the US, while many in China purchase low-cost devices that allow them to get online without spending hundreds of dollars on a phone.

Because China is about to close its doors to manufacturers that use operating systems created by Western companies, the US will continue to be a dominant market to these phone sellers. Promises of China’s dominance are now threatened by the backlash against the NSA’s surveillance programs — or, at the very least, by the Chinese government’s ability to use those programs as a scapegoat.

[Image via Thinkstock]