Internet Censorship in China - Essay Example

Internet Censorship in China Executive Summary The Internet has emerged as a powerful tool of communication and entertainment. It has facilitated existing businesses and has created numerous opportunities for the establishment of new ones. The Internet has become omnipresent and is being used globally for personal, professional and business use. Day by day, the popularity of the Internet is increasing throughout the world. The Chinese government however continues to increase Internet censorship and curb its growth. The Chinese authorities have been particularly harsh on foreign Internet based companies desirous of operating in China. The present paper identifies various issues pertaining to the Internet industry in China. An unequal playing field, plethora of ambiguous rules and regulations, rampant piracy and copycat market offerings act as stumbling blocks in the operations of foreign Internet based companies operating in China. The Internet Services industry as a whole is booming in China. Home grown giants Baidu, Alibaba and Tencent, popularly known as BAT, have become a force to reckon with. Alibaba in particular has hogged the limelight on a worldwide scale. There are numerous other small, yet important players that operate as niche players and cater to specific needs of the Chinese customers. The paper thoroughly analyzes the legal framework in the country which has proved to be a pain in the neck for foreign Internet companies. Finally a modest attempt has been made to recommend alternative strategies to Google to enable the U.S. based behemoth operate in China. Introduction The Internet has revolutionized the way people communicate with each other. It has changed the way business is done. Many new businesses owe their presence to the Internet. This global interconnection of individual networks has made world information accessible to all. It has made the general public aware of numerous contemporary issues. Life, in general, is more comfortable, courtesy the Internet. The increase in work effectiveness and work efficiency is one of the greatest benefits bestowed by the Internet on the corporate world. People from all walks of life have benefitted from the Internet. Remote regions of the world have come on the world stage. There is a tremendous spurt in trade and information exchange between various countries. From the prerogative of high profile physicists initially, Internet has become a necessity for the hoi-polloi today. It is difficult to fathom life without Internet. The popularity of Internet is increasing by the day. More and more people are embracing it with open arms. Yet, there is one country of the world that is curbing the use of Internet rather than promoting it. Surprisingly, the country is none other than China, a name that has hogged the limelight in the last few decades or so. About China China, the most populous nation of the world, has registered jaw-dropping GDP growth rates and has also earned the title of ‘Workshop of the World’. During the last three decades, the Chinese economy has grown, on average, at a rate of 10 percent every year. It has become the preferred destination for most multinational companies given its tremendous market potential. China has however been in the news for wrong reasons as well. Internet censorship in the country is one of them. Internet Scenario in China At the outset, it is important to note that a vast section of the Chinese society uses the Internet. The Internet penetration in the country is 47 percent. China boasts of a mammoth 632 million internet users. As many as 580 million of them access the Internet through their mobile devices (Deagon). The Cyberspace Administration of China exhibits a characteristic swagger when it talks about the country’s Internet policies. The newly formed Cybersecurity and Informatization Leading Group categorically state that it will not allow any foreign company to enter China and make money if it hurts the country. The Chinese authorities have made their stance clear on the presence and usage of Internet in the country. China claims that it has the right to censor content, block sites of ‘unfriendly companies’ and compel foreign companies to host data locally (Mozur). Main Issues The main issues that plague the Internet Services industry in China are discussed below. Unequal Playing Field Foreign Internet companies desirous of entering and operating in China do not get a level playing field with the domestic companies. The ‘Great Firewall’ so created by the Chinese government has been one of the major reasons of success of the domestic companies. Even Weibo, China’s equivalent of Twitter is known to have adhered to the stringent and arguably extremely unfair strictures laid down by the Chinese government. Shown the Exit Door Companies like Facebook and Twitter are household names in many parts of the world. The same companies have however been shown the exit door by China. Facebook, the world’s most popular networking site was banned in China in 2009. Other big names have also had to bear the brunt of Chinas draconian Internet regulations. Social-Cultural Environment Chinese companies tend to do well vis-à-vis foreign companies due to the language factor. Most foreign companies encounter problems while using the specific characteristics of the Chinese language. This results in problems in adaptation of their web pages for the Chinese market. In general, the society is suppressed and human rights are flouted in the country. Searches like ‘The Dalai Lama’ ‘Tiananmen Square’ and ‘Taiwanese independence’ are taboo in China. Such prohibitions bear testimony to the fact that anyone who raises a voice against the current system faces the ire of the authorities. Piracy and Copycats Infringement of intellectual property rights is rampant in China. Piracy of online content and copycat products are pretty common. The Chinese have shown exquisite skill in copying and pirating just about everything including online content. The Industry The Internet Services industry in China is booming. It has proved to be an important factor in China’s economic growth. The industry grew at an annualized growth rate of 19.9 from 2008 through 2013. The number of Internet users in the country has also risen by 15.4 percent during the same period. The Chinese Internet Services industry is likely to reach $82.6 billion by 2018. A sizable expansion of internet coverage in rural and secluded areas, blooming revenue from advertising services and further expansion in e-commerce are likely to provide the impetus to this growth. The opportunity appears mouth watering for any company, including Google, to jump in the fray. Google Google was founded by Larry Page and Sergey Brin in 1998. The company has grown by leaps and bounds since inception and has become a well-renowned name at present. The company is synonymous with ‘search’ for billions of people all over the world. The company’s product and services suit is much larger though. Google’s mission is to ‘organize the world’s information and make it universally accessible and useful (Google.com). The behemoth operates 70 offices in more than 40 countries of the world. The company has met with resounding success in all markets that it operates in. China has been an exception though. The reason for failure is not of its own making. It is the harsh regulatory environment that has not enabled Google to establish itself in China as well as it has done in other countries. The Competitive Landscape Baidu, Alibaba and Tencent are behemoths that rule the roost in the Chinese Internet market space. Popularly known in China as ‘BAT’, these three companies thrive on alliances and cross holdings. Baidu Inc. Baidu Inc. was founded Robert Li in 2000. Headquartered in Beijing, Baidu is essentially a Chinese-language search engine. The company provides other products and services through Baidu PostBar, Baidu Baike, and Baidu Encyclopedia. It derives a large chunk of its revenue through online marketing (Chinese-champions.com). Alibaba Alibaba is the largest e-commerce player in China. The online retailer is part eBay and part PayPal. Many of its features and services are reminiscent of Google also. Alibaba operates number of e-commerce platforms in the country which include Taobao (consumer-to-consumer) and Tmall (business-to-consumer). The company’s businesses also span online payment services, and cloud computing (Custer). Alibaba is pegged to become one of the most valuable companies in the world. The company has successfully adopted the strategy of internationalization. Alibaba.com is now available throughout the world. Alibaba’s massive reach can be gauged from the fact that its sales are more than the combined sales of Ebay and Amazon. As a part of its foreign strategy, Alibaba will focus on emerging markets like Latin America and rest of Asia as these offer lucrative growth opportunities. Tencent Tencent is a dominant player in the Chinese mobile gaming and mobile chat services industry. Tencent also owns a portfolio of social networks and Web portals in China. WeChat mobile messaging service, one of the flagship market offerings of Tencent, reportedly has 468 million active users (Deagon). Alibaba and Tencent have established private equity arms and are actively looking for expansion opportunities. The two giants are likely to grow through vertical integration. Thus, in the times to come, these companies may operate on the online as well as brick-and-mortar mode (Fidelity). Other Players JingDong Mall is one of the leading B2C (business to consumer) e-commerce operator in China (Fidelity). YY is often referred to as China’s Facebook. Riding high on its popular online music and entertainment operations, YY is also making its presence felt in the Chinese market. The genesis of Weibo can be traced to Chinese Web portal Sina from which it was spun off. The microblogging service has strengthened its toehold in China and has a subscriber base of 167 million. Once fierce rivals, Youku andTudou merged to form the country’s biggest video streaming video company. The entity is a mixture of Youtube, Netflix, and Hulu. Youku -Tudou offers top Chinese movies, TV shows as well as user-generated content to its subscribers (Custer). Netease is well known for its games including Diablo and World of Warcraft. In addition to offering blockbuster games, Netease also offers news portals, email, and a host of other web services (Custer). Qihoo offers a vast array of security products and holds leadership position in the country’s web and mobile security market space. The company has a loyal customer base and is well poised for long term growth (Custer). The Legal Framework China’s Internet services industry is highly regulated. There is a complex licensing procedure that the Internet content providers have to undergo. There is a maze of rules and regulations that are interpreted differently by different ministries. The ruling Chinese Communist Party (CCP), infamous for imposing restrictions on the Internet in the country, has decided to tighten the leash even further. In 2011, the government set up the State Internet Information Office (SIIO) as a nodal agency to regulate Internet in the country. It is worthwhile to mention that most of the Chinese legislation regarding the Internet has not been devised by legislative bodies. It has been made by the government departments (Yong). The SIIO is responsible for the ‘Management of Information Content on the Internet’ in China. The stated objective is to develop Internet information service and protect the lawful rights and benefits of citizens, corporations, and other organizations. On the face of it, everything seems fair, equitable and transparent. However, if one reads between the lines, the real intent is to increase the vice-like grip on the Internet. The agency has been given additional powers to regulate instant messaging media like WeChat under the provisions of ‘Regulations for the Development and Management of Public Information Services’. During the last few years, WeChat has emerged as an important ‘citizen journalist’ and ‘social organization’ and has therefore come in the limelight of Chinese officialdom. Going by past records and the reputation of the government, the instant messaging services will soon find itself in rigmarole of rules and regulations. Lu Wei, the head of SIIO, while speaking at the Davos Summit in September this year related the Internet to a car. ‘Both of them need a break’ was the message. Lu minced no words in saying that it is important to curb the freedom of the Internet for legitimate national security concerns (Bissel). As things stand at present, anonymity is not acceptable on any of the instant messaging platforms. Users have to authenticate their identity before signing up on any of these platforms. The Chinese government promulgated the “Provisions on the Administration of Internet News and Information Services” in 2005. These provisions initially pertained to websites, online forums and text messages. The mobile web revolution has prompted the government to extend these provisions to mobile web as well (Yong). Under these provisions, comments on current events can be made only by people who have obtained ‘internet news service qualifications.’ Put differently, one needs the prior approval of the Chinese authorities to be entitled to opine on matters that may have monumental importance to the general public of the country. In addition to the aforesaid legal bindings, there are numerous ‘Other Normative Documents’ that require attention. While these documents cannot be construed as laws, they affect legal practice to a great extent. These requirements stifle online expression, to say the least. In such a scenario, the traditional media, which are already beholden to the government, gains more importance. Recommendations Google, given its expertise in the Internet business and impeccable track record of providing innovative services to its consumers, should do business in China. After all, China is amongst the world’s fastest growing markets and having business in the country could give a huge boost to the company’s revenue. Since the stringent and unfavorable regulatory framework in the country can stifle growth, the company should adopt a different methodology to carry out businesses in China. Some of the possible strategies that Google could adopt are enumerated below. Use a Curtailed Version Google should go by the adage ‘While in Rome, do as the Romans do’. The company will have to block searches pertaining to religion, politics, and any other sensitive topics. Google has to bear in mind that only government approved services can be marketed in the country. By adopting this strategy, Google will surely grow in the country albeit slowly. Joint Venture Google could forge an alliance with a domestic Internet company. The domestic company will be well versed with the nuances of carrying of business in the country. It will have a sound knowledge of Chinese laws. The domestic company will handle all front-end activities and make sure that it remains in the good books of the government. Warner Music has recently inked a pact Internet giant Tencent which is being pegged as a ‘master distribution partnership’ between an ISP and music company (Osawa). Google can also adopt a similar strategy and hunt for a suitable strategic partner. However, under this scenario, Google will have to share its revenue with the joint venture partner. The Offensive Route Google could adopt the offensive route and challenge the unfair and arbitrary rules in China. The company has access to the list of blocked sites. If a user intends to visit any of these sites, Google should redirect the surfer to a mirror version of the same site which should be hosted on Google. Google could encrypt all data and use an encrypted version of the search engine to bring an end to the censorship (Smith). This stance will prove that Google values the truth even if it means confronting the government of a country. Works Cited Bissell, Benjamin. More Tightening Of Internet Restrictions by China. Wordpress 2014. Web. 16 Nov. 2014. Chinese-champions.com,. Chinese Champions: A Decade of Growth And Innovation. N.p., 2014. Web. 15 Nov. 2014. Custer, Charles. Chinas Internet Sector: What You Need To Know. About News 2014. Web. 16 Nov. 2014. Deagon, Brian. China Internet Boom Pumping Earnings, User Growth. Investors Business Daily 2014. Web. 15 Nov. 2014. Fidelity,. China’S Mobile-Internet Industry Is Booming. Fidelity Worldwide Investment, 2014. Print. CLSA Research. China Internet, Sector Outlook. Google.com,. About Google. N.p., 2014. Web. 17 Nov. 2014. Mozur, Paul. In China, Internet Czar Is Taking A Blunt Tone. The New York Times 2014. Web. 15 Nov. 2014. Osawa, Juro. "Warner Music, Tencent in China Distribution Deal; Deal Allows Warner Music to Take Advantage of Tencents Online User Base." Wall Street Journal (Online) Nov 13 2014. ProQuest. Web. 17 Nov. 2014 . Smith, Charlie. Google Could End Chinas Web Censorship In 10 Days – Why Doesnt It?. The Guardian 2014. Web. 17 Nov. 2014. Yong, Hu. China’s Tough New Internet Rules Explained. ChinaFile 2014: n. pag. Print. Read More