Russian cybersecurity giant seeks to expand with stronger local ties

Russian cybersecurity giant Kaspersky has defied broader industry challenges to post robust growth in China, citing a 20-30 percent annual revenue surge over the past five years and touting its potential in the world's second-largest economy as global cyberthreats escalate.

Alvin Cheng, general manager for China unit at Kaspersky, told China Daily that the annual growth of 20-30 percent of Kaspersky's China business outperformed the nation's overall cybersecurity market growth of 9.2 percent projected by research firm IDC for 2023-28.

Cheng attributed the momentum to booming demand for cross-border threat intelligence solutions and localized adaptations, including compatibility with China's domestically developed operating systems, as well as the country's burgeoning digitalization process.

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The Russian cybersecurity firm's performance stands out as the global economic downturn has impacted the cybersecurity sector, where companies now face intense price competition as clients slash spending while demanding stronger protection.

"Security budgets have become the first casualty in corporate costcutting as companies fight for survival in this economic climate," said Li Shaopeng, founder of Beijing-based Digital World Consulting, at a recent conference.

Although the industry is facing challenges worldwide, Kaspersky identified growth opportunities across multiple niche market segments in China.

"China remains a strategic growth market where we see demand evolving beyond traditional information technology and operational technology security tools," Cheng said. "Our threat intelligence services, which now account for 40 percent of our revenue in China, are becoming critical as enterprises navigate cross-border data compliance. We're deepening collaborations with Huawei Cloud and Alibaba Cloud to deliver real-time malware signature updates and threat monitoring for multinational operations."

The executive outlined plans to launch a managed detection and response service project in China in the latter half of this year, backed by an initial over $1 million commitment. The three-year rollout targets $3 million to $5 million in investment scale, with funds channeled into infrastructure like cloud, computing power center and AI-powered analytics tools.

Chinese authorities have ramped up cybersecurity governance in recent years, with a series of laws and regulations, as well as national standards being rolled out to enforce data privacy, cross-border cybersecurity and critical infrastructure protection, addressing needs across sectors.

IDC has projected that investment in China's cybersecurity will hit $18.8 billion by the end of 2025, expanding at a 17.9 percent annual rate from 2021.

"China's high-tech manufacturing and renewable energy sectors — particularly multinationals managing overseas assets — currently drive over half of our local client base," Cheng said, noting that small and medium-sized enterprises now account for 40-45 percent of revenue. "We leverage our global threat intelligence network spanning 200 countries to help businesses venturing abroad."

Cheng highlighted China's industrial internet security advancements, where Kaspersky's operational technology (OT) solutions already lead Asia-Pacific sales, mirroring Beijing's push to harden smart manufacturing and energy grids.

OT cybersecurity refers to safeguarding industrial systems — including machinery, programmable logic controllers and protocol-based communications — against technical flaws, cyber intrusions and data breaches that arise from network connectivity in operational technology environments.

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"In the field of OT security, we are enhancing threat intelligence and gateway detection. Additionally, we are strengthening compatibility with emerging areas such as chips, smart manufacturing and new energy sources like photovoltaics, on top of our existing OT products and systems," Cheng said.

Yu Mengda, general manager of industrial cybersecurity at Supcon Technology Co Ltd, an intelligent manufacturing service provider in Zhejiang province, highlighted Chinese enterprises' growing proficiency in industrial internet security alongside cost-effective service models.

Meanwhile, international players such as Kaspersky differentiate themselves through cross-border threat intelligence networks, rich databases and experience.

"Ransomware infections in control software can encrypt data, obscuring real-time operational visibility and jeopardizing production continuity," Yu said. "This underscores the necessity of malware behavioral analysis and maintaining comprehensive threat signature databases for effective defense."

liuyukun@chinadaily.com.cn