A quality controller makes an inspection at an assembly line at New H3C Group in Hangzhou, Zhejiang province. [Photo by Li Zhenyu/For China Daily]

New H3C Group, a joint venture between State-owned Unisplendour Corp and Hewlett-Packard Enterprise, is expected to more than double its server business in the government procurement market next year, its CEO said.

The information infrastructure provider, which competes with overseas giants such as Cisco Systems Inc and Dell Inc, is seeing opportunities from State-owned enterprises and government agencies, which are embracing homegrown IT products amid concerns over cybersecurity.

Tony Yu, president and CEO of New H3C, said the firm's cloud computing business grew 97 percent so far this year, driven by the robust demand from internet firms and local governments.

"Almost all government-related enterprises and agencies have opened their procurement projects to our products," he said in an interview.

New H3C was founded after HPE sold 51 percent of its stake in H3C to Unisplendour for $2.5 billion last year. The new JV also includes HPE's server, storage and service units on the Chinese mainland.

Beijing-based Unisplendour is an IT arm controlled by Tsinghua Unigroup Co Ltd, which was set up by Tsinghua University.

According to Yu, New H3C is now helping 18 provinces build e-governance clouds.

Its new enterprise clients include Zoomlion Heavy Industry Science & Technology Development Co Ltd, a leading Chinese manufacturer of construction machinery and sanitation equipment.

"Application-driven innovation is the key to success in the era of big data and cloud computing. Investment alone cannot give birth to innovation," he said, adding the firm has allocated 15 percent of its annual revenue, around 3 billion yuan ($435 million) this year, to research and development.

HPE established joint ventures in China, in the hope of tapping into the local government procurement market.

China is attaching increasing importance to information security after the whistleblower Edward Snowden unveiled the massive surveillance program from the US.

Kitty Fok, director of the industry consultancy International Data Corp China, said: "An SOE identity and cutting-edge technologies are both necessities to win in the Chinese market."