Unlike its namesake, the “Great Firewall of China” is not a big draw for foreigners. In fact, it’s proving to be a real deterrent to international business. What does that mean for companies doing business in China and for their global travelers and assignees based there?
First, a little background on the topic.
There has been a lot of recent press about the “Great Firewall of China,” also known as the “Golden Shield Project,” which refers to the internet censorship and monitoring by the CAC (Cyberspace Administration of China). China shows great determination in censoring communication into and out of the country. The “Great Firewall of China” is said to be the most sophisticated filtering/censorship system in the world. Rumors persist that more than 30,000 internet police are searching and shutting down sites that violate China’s constitution and/or attack leaders of state. A wide variety of sites are targeted, including religious sites, political activism sites, certain blog posts, news reporting sites, pornography and much more.
This isn’t sitting well with many, especially China’s younger citizens who are pushing for a more democratic China. Activists are waging war against the firewall, trying to defeat the blocks put in place by creating workarounds. Yet users who repeatedly try to get around the firewall’s blocks run the risk of being reported to authorities.
Even the big guys are blocked!
Examples of high profile and comprehensive blocks by China include those put in place against Google in 2010 plus the more recent blocks on sites such as Businessweek.com, Bloomberg.com, NYTimes.com, Facebook, Twitter and Instagram. Many of the site shutdowns occurred following the 25th anniversary of the Tiananmen Square protests. During the anniversary, the media was awash with the iconic image of Tank Man – a young unknown protester who stood by himself in front of a row of tanks the day after the violent crackdown on protesters in Tiananmen Square in 1989. Since then, people seeking to access Google have to find workarounds.
The Chinese government has stated that it is not concerned with a few 100,000-plus violators, since the majority of the 600 million-plus internet users in China are still not privy to what’s going on. However, these workarounds are creating some anxiety amongst the authorities with regard to the spread of censored/blocked material.
These challenges extend to international businesses in China.
Just as accessing certain sites is banned, operating a VPN in China without a local partner is considered illegal, according to lawyers and state-run media. Companies who fail to obey government orders could face penalties that include any of the following: warnings, stiff fines, temporary shutdowns or revocation of the company’s business license.
How does this impact relocation and your relocating expatriates?
- Disruption to corporate VPN services can cause extreme delays, leading to additional business and productivity costs (some corporations have noted a 10% decrease in efficiency due to low network speeds, rendering it semi-functional). Around 75% of American Chamber of Commerce China members surveyed in 2012 said internet instability impedes efficiency, and 40% said that censorship has a negative business impact.
- Service instability due to controls and privacy blocks slows down the time it takes to open email messages. China ranks 94th worldwide in average internet connection speeds according to one study. Firewalls are limiting expatriates’ access to important news from other countries, so a good backup communication plan should be in place in the event an expatriate is not able to access VPN to conduct business or receive up-to-date information.
- Corporations may think twice before locating their regional headquarters in China
- Those who do have offices in China may be at a disadvantage when it comes to talent recruitment, since many are reluctant to work in China.
While censorship issues can negatively affect international companies doing business in China, Chinese companies are actually benefiting to some degree.
The threat of big international companies entering the China market has diminished, creating a need for Chinese entrepreneurs. China is now pushing even further by marketing its approach to regulating the internet in the form of an “Internet Sovereignty” model to other countries such as Russia and Egypt. China’s aim is to extend the principle of shutting out social media sites like Facebook, Twitter, YouTube and multiple other sites, making access to them subject to the laws of individual countries. The most important point of this model to business users is the blocking of VPNs that have previously been used to escape the firewall. If this spreads, it could prove to be seriously detrimental to businesses.
On one hand, the “Great Firewall of China” is looked upon as a success, considering it is the world's most sophisticated internet censorship mechanism created to date. On the other hand, to most of the international business community, it is seen as a significant negative for China posing a threat to businesses and individual freedoms alike.
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