Citrix owner Cloud Software becomes the latest U.S. software company to leave China as the economy weakens and regulations tighten

Cloud Software Group, the parent company of cloud computing company Citrix, announced it would halt all new commercial transactions in China, becoming one of the latest U.S. tech companies to withdraw from the market.

The decision would extend to customers, directly or through partners, in China, including Hong Kong and Macau, from December 3, a spokesperson said in a statement to the Post on Wednesday.

The business decision was made due to the “increasing costs” of operating in the region, the spokesperson added. The company did not provide further details.

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It followed similar moves since last year by other U.S. tech companies, from Microsoft’s career networking platform LinkedIn to cloud-based software provider Salesforce, to scale back their operations in China as they grapple with weaker economic prospects and tighter data. -security and cross-border data processing requirements in the country.

A view of Shenzhen, South China. Photo: SCMP/ Martin Chan alt=A view of Shenzhen, southern China. Photo: SCMP/Martin Chan>

China implemented the Data Security Law in September 2021. Based on cybersecurity laws, the new rules limit the ways in which data can be processed, emphasize the need to protect national security and interests, and make protecting data security a national security priority.

These regulations have increased compliance costs and increased operational challenges for both multinational technology companies and smaller local businesses.

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In addition to American technology companies, some consulting and research firms have also recently withdrawn from China. This includes US technology research firm Forrester, which closed its Chinese office earlier this year.

Three U.S. and British due diligence firms, including Nardello and the Risk Advisory Group, also left Hong Kong this year or were winding down their operations in China, according to a Wall Street Journal report in October.

As more American companies leave China, Beijing is trying to put on a friendlier face to foreign investors.

China’s Cyberspace Administration proposed in September to relax the country’s cross-border data security controls by waiving security reviews for most business and personal activities that involve sending Chinese data abroad.

Under the new guidelines, the export of data generated by “trade, academic, cross-border manufacturing and marketing activities” would no longer be subject to a regulatory security assessment or a personal information protection assessment.

Cloud Software, based in Florida, was founded in September 2022 after private equity firm Vista Equity Partners and Evergreen Coast Capital, an arm of investment firm Elliott Management, acquired Citrix and merged it with software company Tribico.

As a result of the merger, Cloud Software announced a 15 percent workforce reduction earlier this year.

Founded in 1989 and also based in Florida, Citrix specializes in cloud computing, virtualization technology, virtual desktops and remote access technology.

Citrix has previously worked with major Chinese companies such as, SAIC General Motors and China Euro Vehicle Technology, with sales offices in Beijing, Shanghai, Guangzhou and Hong Kong, according to its website.

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This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice covering China and Asia for more than a century. For more SCMP stories, explore the SCMP app or visit the SCMP Facebook page Tweet Pages. Copyright © 2023 South China Morning Post Publishers Ltd. All rights reserved.

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