Commercial cryptography, often referred to as commercial encryption, is a critical technology for protecting non-state secret information through encryption and security authentication. Recently, the State Council executive meeting reviewed and passed the revised draft of the "Commercial Cryptography Management Regulations," highlighting its growing importance in national security and data protection frameworks.
This move aims to further standardize the application and management of commercial cryptography, urging platform companies to fulfill their responsibilities in protecting user passwords and ensuring the security of personal privacy, commercial secrets, and sensitive government data.
Why Commercial Cryptography Matters Now
In the era of digital transformation, data has become a key factor of production. The市场化 (marketization) of data elements necessitates robust data security, and cryptography serves as the core technology and foundational support for safeguarding data throughout its entire lifecycle. It is a strategic resource for cyberspace security.
Commercial cryptography is distinct from core and ordinary passwords used to protect state secrets. Instead, it focuses on encrypting and authenticating non-classified information. It forms a triple foundation for AI, data elements, and data security. For generative AI, commercial cryptography can empower model outputs—such as text, images, and videos—by ensuring uniqueness, integrity, and non-repudiation authentication.
Policy Support and Market Growth
China has introduced a series of policies to emphasize the application of commercial cryptography. The implementation of the "Password Law" in 2020 required operators of critical systems to conduct password application security assessments, propelling the industry into a rapid development phase. The "14th Five-Year Plan for Digital Economy Development" in 2022 further underscored the importance of cryptography across various sectors.
Government affairs, finance, transportation, energy, water conservancy, and healthcare are among the industries that have formulated overall plans and solutions for password applications.
Globally, the commercial cryptography market is concentrated in North America, Western Europe, and the Asia-Pacific regions. According to CCID data, the global commercial cryptography industry规模 (scale) was $37.57 billion in 2021, with an annual growth rate of 22.18%. It is projected to reach $102.64 billion by 2027, with a compound annual growth rate (CAGR) of 18.23%.
In China, the market size for commercial cryptography is expected to have reached 70.764 billion yuan in 2022, a year-on-year increase of 36.14%. For 2023, it is anticipated to grow to 98.585 billion yuan, up 39.32%.
Key Application Scenarios
Commercial cryptography is integral to seven major application scenarios:
- Internet of Things (IoT)
- Vehicle-to-Everything (V2X) communication
- Industrial Internet
- Smart cities
- Blockchain
- 5G security
- Cloud computing
Blockchain and digital currencies rely heavily on cryptography as their core technology. Similarly, device authentication and communication encryption in IoT and V2X networks are impossible without cryptographic support.
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Industry Chain Breakdown
The commercial cryptography industry chain can be divided into three segments:
- Upstream: Password equipment providers, including those involved in password algorithm research, design of cryptographic chips, and other core components. Representative companies include circuit board manufacturers like Shennan Circuits and Shengyi Technology, as well as cryptographic chip makers such as Tongfang Co., Ltd., Hualan Micro, Fudan Electronics, Sanwei Xinan, National Chip Technology, and CETC Cyber Security.
- Midstream: Manufacturers of commercial cryptography software and hardware products, including password machines/cards, digital certificates, VPNs, tokens, electronic seals, and quantum encryption. Key players include Jiangnan Tianan, Yuweng Information, Xinda Jian'an, Geer Software, Jida Yuan, Sinasec, Digital Certification, Topsec, Sangfor, Venusense, Qi An Xin, Dipu Technology, Feitian Technologies, Haitian Fangyuan, QuantumCTek, and Jiuzhou Quantum.
- Downstream: Service providers focusing on software, system integration, and application, primarily serving government, telecommunications, and financial sectors. Companies like Zhongfu Information offer password management platforms.
Global and Domestic Competitive Landscape
Globally, leading cryptographic hardware companies are predominantly European. According to MarketResearchIntellect, in 2020, only three Chinese companies ranked among the top nine in the global cryptographic hardware security market: CETC Cyber Security, Jiangnan Tianan, and Sanwei Xinan.
Domestically, the commercial cryptography industry is relatively fragmented. In 2020, there were 551 enterprises with certified commercial cryptographic products. The industry concentration ratio CR5 was 25%, and CR9 was 40.4%. In the identity and digital trust software segment, the top five companies by market share in the first half of 2022 were Asiainfo Security, Digital Certification, Jida Yuan, Geer Software, and Sinasec, collectively accounting for only 30.7% of the market.
Other notable companies include:
- DBAPPSecurity, which focuses on cryptographic功能服务 (functional services) and constructs overall commercial cryptographic solutions.
- Zhengtong Electronics, which has independently developed cryptographic security chips supporting SM2, SM3, and SM4 algorithms and obtained commercial cryptographic product model certificates.
- Changshan Beiming, whose wholly-owned subsidiary Beiming Software is a core strategic partner of Huawei and has passed multiple international standard certifications such as CMMI5 and ISO9001.
- North Integral, whose encrypted instant messaging product based on private cloud, Xinyuan DouDou, is being applied in government, military, financial, and energy sectors.
Frequently Asked Questions
What is commercial cryptography?
Commercial cryptography refers to encryption products and technologies used to protect non-state secret information, ensuring data confidentiality, integrity, and authentication in various applications.
How does commercial cryptography support AI?
It enables authentication of AI-generated content, such as text, images, and videos, ensuring their uniqueness, integrity, and non-repudiation, which is crucial for trust and security in AI systems.
What are the main drivers of growth in this market?
Key drivers include increasing data security regulations, the rise of digital economies, expansion of IoT and blockchain technologies, and heightened demand for data protection across industries.
Which sectors are major adopters of commercial cryptography?
Government, finance, telecommunications, healthcare, energy, and transportation are among the leading sectors adopting cryptographic solutions for data security.
How is the competitive landscape structured?
The market is relatively fragmented with numerous players specializing in different segments of the industry chain, from chip manufacturing to software solutions and system integration.
What role do policies play in this industry?
Government policies and regulations, such as the Password Law and digital economy plans, significantly drive adoption by mandating security standards and assessments for critical systems.