Barriers to Foreign Investment in the Chinese Internet Industry
Summary: Developing an Internet business in China is not easy, even though the country has the largest Internet user population among all countries in the Asia-Pacific region. Chinese laws make foreign investment difficult, and the country -- quite unlike the United States -- has strict legal controls on information and distribution and poor enforcement of intellectual property laws. This article explains the barriers facing high-tech companies in China.
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Introduction
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China has the largest population and one of the fastest-growing economies in the world. If only one percent of its population participates in the New Economy, China
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Because Internet portals funded by foreign investors usually publish news releases and advertisements based on the less-stringent standards abroad, these portals may tread on very sensitive areas. While the Chinese authorities have yet to tighten control over the contents of these portals, the authorities may implement more restrictive regulations should the political situation require them to do so.
Confusing Regulatory Structure
Like the laws governing the Internet industry, the regulatory structure in China is very confusing, especially to foreign investors who are concerned with predictability and stability. So far, it is unclear which ministry has the final say over Internet and e-commerce matters. While the MII is responsible for overseeing telecommunications, multimedia, satellites and the Internet, other government agencies are also involved in regulating the Internet industry.
For example: • The Ministry of Public Security has authority to prevent the dissemination and use of information and products that are considered harmful to the state and society.
• The State Secrecy Bureau has promulgated regulations concerning state secrecy protection.
• The Ministry of
China has already overtaken Japan to become the world`s second-largest economy in recent five years. “However, such economic
Since the reform and opening up, the economy of China grows significantly, as an emerging economy, China's economy has made tremendous contributions to the global economy, and Renminbi has become one of the most important currency in the world. According to the survey conducted by China National Bureau of Statistics found that from 1979 to 2012, China has attained an annual average growth rate of 9.8% for its national economy, while the annual average growth of the world economy is only 2.8 % during the same period. In past 30 years, China's GDP surpassed Japan’s, China became the world 's second largest economy, in addition, the huge total volume of trade makes China become the world 's largest trading nation. The contribution of China’s
The economy in China is doing well. China has in its recent years reached financial stability. This is due to the fact that there is a high level of domestic demand. Because of this, many companies around the world begin to invest in the Chinese market. China is also one of the fastest growing when it comes to Information Technology and has been able to attract companies such as Google and even Microsoft. It has been forecasted that the Internet industry in China is expected to increase at a rate of about ten percent within the next five years. This is great news because Google will be able to benefit.
Internet censorship and the requirement of self-censorship not only harm the economy inside China, but also are negatively affecting China in aspects of international commercial trade, even as globalization becomes the trend of today’s world. Chinese Internet censorship is applied to both directions; not only blocks Chinese Internet users’ access to certain foreign websites, but also prevents foreigners from knowing the truth about China through refusal of releasing reliable information. So when foreign companies want to enter the Chinese market, they face a serious question: “How do you assess an investment opportunity if no reliable information about social tensions, corruption or
This issue is very concerning for all of China because the government will not allow any opposition to itself. The government is not moderated and therefore has indefinite power. There is nothing to stand in the way of the government doing whatever they want. There are 420,000,000 Internet users in China. That is more than the entire population of the United States. Also, recently there have been some rally cries on the Internet in China that are similar to those of the Middle East/Egypt. China is becoming even stricter on the Internet usage policies because they do not want what happened in Egypt to spread to China. The government has also said that if any reporters come to the supposed rally sites they will either be deported or arrested and sent to jail.
The Internet’s continuous advancement has produced the need for an on-going debate on whether or not the government should have the power to control the Internet. The idea of the government having control over what each country’s citizens can see on the Internet is also called Internet Censorship. Internet Censorship “is the control or suppression of the publishing of, or access to information on the Internet.” Internet Censorship varies from country to country depending on each country’s current usage and philosophy of how it should be used. (toptenreviews.com) Currently, there are ten countries including
The rise in China from a poor, stagnant country to a major economic power within a time span of twenty-eight years is often described by analysts as one of the greatest success stories in these present times. With China receiving an increase in the amount of trade business from many countries around the world, they may soon be a major competitor to surpass the U.S. China became the second largest economy, last year, overtaking Japan which had held that position since 1968 (Gallup). China could become the world’s largest economy in decades.
Regulation of the Internet is a volatile topic. One reason comes from the very nature of the Internet. While not entirely different from
Now, many Chinese citizens are attempting to access these applications and searches without censorship by “connect[ing] to virtual private networks that provide them with communications channels to servers outside the Chinese mainland” (Bradsher 4). Though, many citizens have found loopholes in order to post their messages to these websites. For example, on Weibo (the Chinese version of twitter), if a user were to post using a specific keyword, the post would automatically be deleted, if not manually by a superior on the site if it slipped through the system. However, because the use of “abbreviations, neologisms, homophones, and homographs” by users, many political satirists, revolutionists, or regular citizens find themselves sliding through the cracks thus escaping the censoring governments reach (Wang and Mark 5). In addition, because the government also changes from time to time, a man named Yu Jia, a government critic stated that “Today's China is very different from Chairman Mao's China. I think then, it used to be like an iron slab, and there was only really one idea. It was completely impermeable. But now, it's more like a fishnet, and there are holes” (Jia, Han and Fu 4). This further proves the argument that legislation in regard to behavior online is too varied in
Corporations that move into China have long recognized that internet censorship is a fact of life. In 2006,
Now any website or web service also had to monitor and self-sensor any information from their services that might contain material that might be harmful to the state. In the same year “The Measures for Managing Internet Information Services” outlined what and how hosts should monitor Internet traffic. This document explicitly stated which forms of speech are not expectable. Any speech or information, harmful to the state, containing differing views on religion, or those that may cause disorder or lead to national disunity have been stated.
My research project explored the extent of internet censorship and its necessity to China as a form of societal protection. It discussed the advantages, disadvantages and impacts of censorship on Chinese society. As I researched the topic, I determined that censoring parts of the internet was more than just about protecting the young Chinese children from online predators and distressing content. My initial intention was to highlight the wrongfulness of widespread censorship however, as I researched, I was able to understand that censoring parts of the internet improved the Chinese economy, prevented cybercrimes from occurring while concurrently offering online safety. I discovered this by analysing several different websites, YouTube videos and conducting two interviews with people with expertise in the Chinese internet. My outcome, presented in the form of a feature article, explained that censoring parts of the internet benefits society more than it harms.
Google entered China in 2006 with high hopes of taking over the Chinese internet market. In order to become a major player for internet search engines in China, however, they had buckled and filtered search results according to the Chinese government. When Google.cn was launched, a loud public outcry over its giving in to the Chinese government on censoring and filtering search engine results, the company faced a communications crisis. Since Google had always been known for its free thinking, this seemed a vast contradiction. From a communications standpoint, Google’s greatest vulnerability in this crisis lay with a tarnished public image.
The freedom of speech that was possible on the Internet could now be subjected to governmental approvals. For example, China is attempting to restrict political expression, in the name of security and social stability. It requires users of the Internet and electronic mail (e-mail) to register, so that it may monitor their activities. In the United Kingdom, state secrets and personal attacks are off limits on the Internet. Laws are strict and the government is extremely interested in regulating the Intern et with respect to these issues.10 Laws intended for other types of communication will not necessarily apply in this medium.
With China emerging as a global power in business within the last decade, knowing about doing business in China has become more important than ever. There are both many advantanges and challenges with doing business in China in this modern era, and understanding both sides of this coin is the key to being successful in China. Some aspects to keep in mind include the cultural barrier, the price of the work force in China compared to the United States, and have the “made in China” brand be accepted back in the United States.