U.S. security software maker Symantec Corp and Russia's Kaspersky Lab downplayed a move by Beijing to exclude them from a list of anti-virus vendors whose products are approved for sale to central government agencies in China.
The People's Daily, the official newspaper of the ruling Communist Party, said on its English Twitter feed on Sunday that the government's procurement agency has excluded Symantec and Kaspersky from a list of security software suppliers.
Kaspersky confirmed on Monday that authorities in Beijing had moved to restrict government purchases of software from non-Chinese companies.
"Chinese Central Government Procurement Center temporarily rescinded its endorsements of all foreign security providers," Kaspersky spokeswoman Susan Rivera said.
"However, this restriction only applies to national-level institutions whose funding comes from the central government procurement budget, and does not include regional governments or large enterprises."
Symantec said in a statement that the list referred to in Chinese media reports only affected some types of products.
"It is important to note that this list is only for certain types of procurement and Symantec products are not banned by the Chinese government," the statement said.
"We are investigating this report and will continue to bid for and win government projects in China."
Shares of Symantec closed up 1.7 percent at $23.56 on the Nasdaq on Monday. The Nasdaq Composite Index rose 0.72 percent.
The People's Daily also tweeted that it had approved the use of five Chinese anti-virus software vendors: Qihoo 360 Technology Co, Venustech, CAJinchen, Beijing Jiangmin and Rising.
FBR Capital Markets analyst Daniel Ives said he sees the development becoming a more contentious issue over the coming months.
"It's another headwind for the company as Symantec already faces numerous challenges to show growth again. China remains a headache situation for Symantec as well as other U.S. tech providers across the board." Ives said.
Symantec said last month it was in talks with Chinese authorities following reports that China had banned use of one of its products, data loss prevention software.
Sunday's report is the latest sign that Beijing is intent on promoting use of domestic information technology amid concerns about U.S. spying and the indictment of five Chinese military officers on cyber espionage charges.
Still, Eric Johnson, dean of the business school at Vanderbilt University and an expert on cyber security issues, said the Chinese government's move is only a "symbolic one" and will have "little meaningful impact" on Symantec.
Chinese technology corporations like Huawei Technologies Co Ltd [HWT.UL] and ZTE Corp have grown into sophisticated global conglomerates in past years, and some analysts speculate that Beijing is promoting its local industry standard-bearers on its own home turf at the expense of U.S. corporations.
Chinese state media have lashed out at Google Inc, Apple Inc and other U.S. technology companies, calling on Beijing "to punish severely the pawns" of the U.S. government for monitoring China and stealing secrets.
U.S. tech companies such as Microsoft Corp and Qualcomm Inc have recently faced anti-trust investigations, while IBM Corp and Cisco Systems Inc have reported declining sales in China.
(Additional reporting by Subrat Patnaik and Abhirup Roy in Bangalore; Editing by Maju Samuel)