China's Complicated Relationship With U.S. Tech Firms

Later this month, execs from tech giants like Microsoft Corporation MSFT, Apple Inc. AAPL and Cisco Systems, Inc. CSCO are set to meet with Chinese President Xi Jinping when he comes to the United States for a visit.

The meeting is expected to yield unexpected results, as tension between China and the United States has been on the rise recently, especially regarding Beijing's treatment of U.S. firms operating in China.

Struggling To Operate

In recent years, it has become increasingly difficult for U.S. firms to maintain their operations in China, as new regulations designed to help grow China's tech sector have created a heavy burden for U.S. firms.

In 2006, the nation developed a plan that was meant to help reduce dependence on foreign technology. As a result, U.S. firms have been pushed to forge relationships with local companies and help those firms improve their skills.

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Mistrust

Perhaps the largest obstacle that U.S. tech firms doing business in China face is a lack of trust between Chinese officials and U.S. companies. Since Edward Snowden revealed that the United States was spying on foreign governments without their knowledge, China has been scrutinizing U.S. tech firms in search of any way that their business practices could store sensitive data and share it with Washington.

Microsoft had its offices raided, and the firm's Windows 8 update was banned from government computers amid worries the operating system would be used by U.S. officials to spy. That mistrust has affected U.S. brands as their Chinese customers are hesitant to buy for fear of being monitored.

Meeting A First Step

Jinping's visit could be a good first step toward easing tensions and making the Chinese market more accessible to foreign firms. However, some say that the meeting is likely to be little more than a show, as Jinping is still at odds with President Obama over several issues like cyber crime and intellectual property rights.