The sheer size of the nation's IT industry, combined with ongoing government support for indigenous technologies, make China a hotbed of innovation, particularly when it comes to deploying open source software. Indeed, China already has its own distribution of Linux – Red Flag Linux – and is accelerating its open source approach to technology development.

In April, CCN Open Source Innovation Joint Lab, a collaboration between the Ministry of Industry and Information Technology (MIIT) Software, the Integrated Circuit Promotion Center (CSIP), the National University of Defense Technology and Canonical, announced the public preview of Ubuntu Kylin, the integrated software stack for desktop environments. While government users and academia have been the primary users of open source technologies by default, there is a growing appetite among Chinese developers for scalable systems and agile software development. This report discusses the attributes shaping the development of China's open source software market and examines its ever-growing open source ecosystem.

The 451 Take

It is encouraging to see the broader use of open source technologies to drive innovative business models and service offerings. The availability of multiple investment outlets will continue to play a role in mobilizing the open source movement in China, which is likely to create a ripple effect on user deployments. On the commercial front, building tools and platforms around open source software projects have already given open source technology a new lease on life. As competition heats up, we expect to see a raft of market players – both open source specialists and commercial technology providers – battling for customer 'mindshare' and wallet share. To be successful, providers will have to take a co-development approach from start to finish while working with multiple parties from within the open source software ecosystem.

The early days of open source

Despite the downfall of Red Flag Software, the maker of Red Flag Linux, the widespread use of Red Flag Linux had been largely viewed as the official stamp of approval from the Chinese government to legitimize IT operations with open source software. In the case of Red Flag Linux, it wasn't the only project in the country. Nevertheless, it's the single biggest open source project initiated by local community users and was backed by government-owned investment outlets, including NewMargin Ventures and MIIT's CCID investment arm. This also points to the practicality of open source implementation when financial commitment seems necessary to make open source projects thrive. While open source development has caught the attention of local businesses – government customers and academia in particular – open source software was often perceived as the cost-effective alternative to proprietary software.

Additionally, many of the open-source projects were community-driven, which relied on the participation of community users – from bug fixing to component maintenance to integration. Therefore, the involvement of community users tended to determine the viability of any open source projects. Perhaps the biggest hurdle to the widespread use of open source software was rampant piracy of commercial software, which in turn limited the economic value and corporate support of open source technology development. Consequently, open source software development was confined to supporting custom or seasonal projects.

The new era of open source

The situation is changing as open source software enters a new era of development, with companies of all sizes looking for new ways to improve operational efficiency while keeping customers engaged. The new era of open source activity is driven by three main attributes – innovation, investor backing, and IPR focus.

Chinese leaders (provincial and central governments) are undoubtedly enthusiastic proponents of innovation for competitiveness, but it is the emergence of innovative startups and tech unicorns such as Meituan-Dianping, Lufax, Toutiao and Didi Chuxing that has helped create the excitement and enthusiasm among market practitioners in the country. The big four Internet giants, which are known as BATS (Baidu, Alibaba, Tencent and Sina Corp), have already played an active role in creating innovative services and technology platforms with open source technologies. The cloud computing arm of Alibaba Group, for example, is a heavy user of Hadoop and its proprietary cloud platform Apsara is a general-purpose distributed computing platform using open source technology as a foundation. Tencent, meanwhile, is both an advocate and user of open source technologies. The company has shared two open source projects – Tinker and QTAF – publicly and is deploying an OpenDaylight-based SDN controller.

As discussed earlier, financial commitment serves as an important determinant for any successful open-source initiatives. In China, corporate venture capital (CVC) and venture capital (VC) funding has been central to that development. In 2015, the Alibaba Group established the Alibaba Entrepreneurs Fund as a way to incentivize young leaders and entrepreneurs to become part of the Alibaba ecosystem. Baidu has also teamed up with Standard Chartered Bank to roll out the SuperCharger Fintech Accelerator program, going after the fast-growing financial technology sector. While these investment outlets are not specific to the sponsorship of open source projects, they provide the necessary financial injections for its long-term viability. National open source champions like Huawei, ZTE and H3C Technologies not only work closely with open source communities such as the Linux Foundation, OpenStack and OpenDaylight, they have also deepened their domain expertise through developing in-house capabilities and strategic investments.

Knowledge sharing and collaborative learning have been the guiding principles behind the open source movement in the country. It's imperative to follow those guiding principles and comply with the terms provided under the common licenses such as GPL (general public license) v2 and v3, Apache and MIT by which users are free to run, share and modify the software that would benefit other users as long as they provide the source code. Yet the innovative use of open source software has opened a window of opportunity for open source specialists to monetize professional services such as training and technical support for open source software. Red Hat, Canonical, Mirantis, SUSE and a number of Chinese OpenStack vendors including EasyStack, UnitedStack, AWCloud and 99Cloud have provided for-profit services using open source technologies.

As customers begin to realize the value of service and support, they are willing to pay a premium for it. Their spending patterns often led to the productization of services, which could be in the form of extensions, plug-ins or add-ons to the open source software, yet the optional offerings are based on proprietary technology. Examples of the IPR-based (intellectual property rights) offerings built on open source software include Huawei FusionCloud, EasyStack ESCloud, H3Cloud OS and Red Hat Enterprise Linux. With FusionCloud, Huawei says it has deployed proprietary technologies to orchestrate the OpenStack-based components –compute, storage and networking – as part of its service differentiation.

Open source communities

Local developers and technology specialists believe in the power of collaboration to drive co-development and marketing opportunities. An open source community like the Beijing Linux User Group (BLUG) has been in the Chinese user community since 2002, with members coming together to share their experience and knowledge of Linux on a monthly basis. Open Source China (OSC), established in August 2008, claims to have more than 2.3 million registered members today. In addition to promoting code sharing, OSC also provides resources such as technical forums, blogs and translation services to motivate local developers to use open source technology. In 2013, OSC made available a full stack of SaaS-enabled software development tools and services such as source code management, project management, code review and a demonstration PaaS to members. Using cloud as an enablement platform, OSC says the cloud platform has hosted more than 300,000 open source projects in fewer than two years.

However, the explosion of new technologies and service delivery models means that local developers will need to make new connections in order to keep pace with changing IT and business requirements. To that end, several international open source communities have caught the attention of Chinese developers. These include the OpenStack Foundation, OpenDaylight Foundation and Cloud Native Computing Foundation. China already has a thriving OpenStack user community and there is an increased representation from Chinese companies on the OpenStack Foundation board of directors, including EasyStack, China Mobile, Huawei and INWINStack (Taiwan). Additionally, 10 out of 23 OpenStack Gold Members are from mainland China – 99Cloud, China Mobile, China Telecom, EasyStack, Inspur Co, H3C, UnitedStack and ZTE, including the newly added Gold members China Unicom and FiberHome. Huawei has upped its OpenStack influence, becoming one of the eight Platinum members sponsoring the OpenStack Foundation since March 2017.

Besides telecom incumbents – China Telecom, China Unicom and China Mobile, the OpenDaylight Foundation is increasingly gaining support from Chinese internet services leaders including Alibaba, Tencent and Baidu and technology vendors such as ZTE, Huawei, Lenovo and H3C. Engineers from these organizations are active participants in the OpenDaylight project, working collaboratively to drive the interoperability and manageability of networks via software-defined networking (SDN). ZTE is one of the four Platinum members sponsoring the OpenDaylight Foundation, and seven out of 30 OpenDaylight Silver members are from mainland China. In addition to the three telecom incumbents, Tencent and Baidu have joined the OpenDaylight Advisory Group to provide technical and strategic guidance to the technical steering committee and the developer community based on real-world examples of network engineering and operations.

As Chinese companies head down the road to IT and business transformation, agility and manageability come to mind. Taking a lightweight approach to application deployment with container technology is currently in the industry's spotlight. While the notion of achieving continuous development and operations with microservices is still in the early stages of development, Chinese companies are willing to put financial skin in the game with various levels of investment and involvement, particularly container technologies and container management platforms like DC/OS and Kubernetes. Originally developed by Google engineers as an internal platform for container deployments, Google donated Kubernetes as the seed technology to the Linux Foundation to form the Cloud Native Computing Foundation in 2015. The two-year old Cloud Native Computing Foundation has quickly established itself as the de facto authority to drive the adoption of cloud-native systems with a growing list of members. Huawei is the first Chinese company that has achieved the Platinum member status. There are two Gold members (Alibaba Cloud and Tencent Cloud) and six Silver members (Caicloud, COOS, DaiCloud, EasyStack, Harmony Cloud and TenxCloud) from China.

Open source demand trend

The Chinese government has been a strong advocate and heavy user of open source software. Led by MIIT Software and Integrated Circuit Promotion Center (CSIP), which is an affiliate of the Ministry of Industry and Information Technology, together with the National University of Defense Technology and Canonical, the CCN OSS Joint Innovation Lab was established in 2014 to promote the development of open source software, develop best practices and facilitate the formation of a thriving open source ecosystem. One of the major open source projects for the joint task force to undertake is the development of a Chinese version of the Ubuntu desktop and cloud – Ubuntu Kylin.

Accordingly, Ubuntu Kylin is more than just the localization of language. In version 17.04, it is touted to deliver a simple and enriched experience for users to browse, search and manage their desktop environments. Positive government support is instrumental in driving the broader use of open source software in the private sector. And the openness of open source systems could only help as business organizations are seeking ways to avoid vendor lock-in. Perhaps the next question is whether local businesses have the skills and or resources to invest in fine-tuning and putting various open source projects into practice.
Agatha Poon
Research Director, Asia-Pacific Services

Agatha Poon is Research Director for Asia-Pacific Services at 451 Research. She joined 451 Research in April 2010, bringing more than 15 years of experience as a market research professional and expertise in cloud computing and business transformation strategies. She is instrumental in providing support for advisory service engagements and leads the research program in the Asia-Pacific region, with a particular focus on cloud services and digital strategies.

Liam Rogers
Research Associate

Liam Rogers is a Research Associate at 451 Research. He holds a BA in English with a minor in Business Administration from Shenandoah University. He also has an MA in Professional Writing and Rhetoric from George Mason University, where he received an award for Outstanding Graduate Student in Writing and Rhetoric.

Keith Dawson
Principal Analyst

Keith Dawson is a principal analyst in 451 Research's Customer Experience & Commerce practice, primarily covering marketing technology. Keith has been covering the intersection of communications and enterprise software for 25 years, mainly looking at how to influence and optimize the customer experience.

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