US President Barack Obama speaks during an interview with Reuters in the Library of the White House in Washington March 2, 2015.[Photo/Agencies]

In a Reuters interview, Obama said, "(The law) is something that I've raised directly with President Xi (Jinping).

"We have made it very clear to them that this is something they are going to have to change if they are to do business with the United States."

The three companies were not available for comment on Tuesday. China Daily has learned that IBM and Microsoft had previously expressed willingness to work with the Chinese government on security issues.

According to industry consultancy IDC, China will contribute more than 10 percent of the global spending on IT by 2018 despite a slowing economy.

Kitty Fok, manager of IDC China, said increased data security awareness among top political leaders and State-owned enterprises following the Edward Snowden case in 2013 have greatly increased the use of local providers.

Snowden, a former US National Security Agency subcontractor, made headlines when he leaked top secret information about the agency's surveillance activities.

"The market share of foreign IT providers is set to drop because China is keen to have the ability to fully control and influence every IT product running in strategically important industries, such as banking and energy," Fok said.