Foreign companies don’t have it easy in China. Most common social networks and sharing sites are blocked. Google, Facebook and Twitter are blocked by the government, and any companies that want to gain a foothold in the country usually find that laws and regulations make it difficult to operate. Privacy took a major hit after a new law that took effect on January 1st requires companies to allow law enforcement to decrypt private data.
China sites terrorism and security as its reason for the new law, which is not unlike other countries. The US elections have introduced new laws that also require decryption backdoors for local law enforcement. They cite terrorism and human trafficking as the reason for the new proposal.
China does not require these foreign countries to store any data on local Chinese data centers or provide backdoors for the Chinese government. However, the new law requires any of these technology companies to provide assistance to local law enforcement should they ask for decrypted data. US and European groups are unhappy with the decision backing claims that the law is vague and could be open to interpretation.
China is known for having strict policies on foreign technology companies. However, its push to prevent competition has crippled some of its own growth. For instance, China has tried to create proprietary 3G wireless standards and its own radio frequency identification chips. Both efforts failed.
As China continues to push back on foreign technology, its people continue to want popular brands that are found in most other countries. The Chinese have been asking for brands such as Apple iPhone but can’t gain access due to the harsh Chinese government regulations. Qualcomm, a popular mobile chip manufacturer, just paid the Chinese government $975 million to continue business in the country and settle an antitrust lawsuit.
Recently, Microsoft has been involved with a probe from the government. The government is currently looking into allegations that the software giant could be violating antimonopoly laws. This could cost the company large amounts in fees to settle or fight the allegations. It’s this type of probe that scares off other foreign technology companies from entering China.
Whether or not China decides to cooperate with foreign companies remains to be seen. It’s one of the biggest struggles for technology firms since China is a wealth of customers but also legal concerns.